All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Huntington Bancshares in Focus
Huntington Bancshares (HBAN) is headquartered in Columbus, and is in the Finance sector. The stock has seen a price change of -13.81% since the start of the year. The regional bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 4.67%. This compares to the Banks - Midwest industry's yield of 2.69% and the S&P 500's yield of 1.6%.
In terms of dividend growth, the company's current annualized dividend of $0.62 is up 2.5% from last year. Huntington Bancshares has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 9.37%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Huntington Bancshares's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBAN for this fiscal year. The Zacks Consensus Estimate for 2022 is $1.46 per share, with earnings expected to increase 35.19% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HBAN is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report
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