Is Truist Financial (TFC) the Best Regional Bank Dividend Stock to Buy?

In the ever-evolving landscape of dividend investing, regional banks often present a compelling case for income-focused investors. Among these, Truist Financial Corporation (TFC) stands out as a strong contender. With a high dividend yield, a sustainable payout ratio, and a history of consistent dividend payments, TFC offers a blend of stability and growth that is hard to ignore. But is it the best regional bank dividend stock to buy? Let's delve into the details to find out.

Key Financial Metrics: Why TFC Shines

Truist Financial's dividend yield of 5.98% is a standout feature, significantly higher than the sector average of 1.49%. This means that for every $100 invested in TFC, investors receive $5.98 in dividends annually. This high yield is particularly attractive in a low-interest-rate environment, where traditional savings accounts and bonds offer paltry returns.



The payout ratio of 65.07% indicates that TFC is paying out 65.07% of its earnings as dividends. While this is slightly higher than the ideal payout ratio of less than 60%, it is still within a sustainable range. This suggests that the company has enough earnings to cover its dividends while retaining some earnings for reinvestment in the business.

Dividend History and Growth: A Steady Climb

TFC has a consistent dividend history, paying dividends on a quarterly basis. The most recent dividend amount per share is $0.519, contributing to a dividend yield of 5.62%. The dividend payments per share have shown an average growth of 0.00% over the past 12 months, 3.80% over the past 36 months, 4.00% over the past 60 months, and 8.15% over the past 120 months. This steady growth indicates that the company has been able to increase its dividends over time, which has positively impacted the dividend yield.



Comparing to Peers: How Does TFC Stack Up?

When compared to its peers in the sector, TFC's dividend yield of 5.98% is higher than that of M&T Bank (MTB) with a 30-day total return of 17.16%, Huntington Bancshares (HBAN) with a 30-day total return of -2.72%, Regions Financial (RF) with a 30-day total return of -2.89%, and Citizens Financial (CFG) with a 30-day total return of 4.66%. This makes TFC a more attractive option for investors seeking high dividend yields.

Prospects for Future Dividend Increases

The prospects for future dividend increases appear promising. The company has increased its dividends for 1 year, which is a positive sign of financial stability and the ability to pay consistent dividends in the future. Additionally, the dividend payout ratio of 62.34% suggests that there is room for further increases, as the company is not paying out all of its earnings as dividends.

Red Flags to Watch

While TFC presents a strong case, it is essential to be aware of potential red flags. The payout ratio of 65.07% is slightly higher than the ideal range, which could indicate that the company is returning most of its earnings to shareholders. This could limit its ability to reinvest in growth opportunities. Additionally, the company's total return of -3.76% over the past 12 months and a year-to-date decline of 18.89% could be a cause for concern. However, the 5-year total return of 47.42% suggests that the company has performed well over the long term.

Conclusion: Is TFC the Best Regional Bank Dividend Stock?

In conclusion, Truist Financial Corporation (TFC) presents a compelling case for income-focused investors. With a high dividend yield, a sustainable payout ratio, and a history of consistent dividend payments, TFC offers a blend of stability and growth that is hard to ignore. While there are potential red flags to watch, the prospects for future dividend increases and the company's strong performance over the long term make it a strong candidate for a regional bank dividend stock. However, as with any investment, it is essential to conduct thorough research and consider your risk tolerance before making a decision.