Yahoo Finance Humana (NYSE:HUM) Has Announced A Dividend Of $0.885
The board of Humana Inc. (NYSE:HUM) has announced that it will pay a dividend of $0.885 per share on the 26th of July. This means the annual payment will be 1.0% of the current stock price, which is lower than the industry average.
Check out our latest analysis for Humana
Humana's Earnings Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive. Humana is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
The next year is set to see EPS grow by 65.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 15% by next year, which is in a pretty sustainable range.
Humana Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.08 in 2014 to the most recent total annual payment of $3.54. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Humana Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Humana has impressed us by growing EPS at 5.2% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Our Thoughts On Humana's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Humana is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Humana that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
