Yahoo Finance Huntington Bancshares (NASDAQ:HBAN) Has Announced A Dividend Of US$0.15
Huntington Bancshares Incorporated's (NASDAQ:HBAN) investors are due to receive a payment of US$0.15 per share on 1st of October. This makes the dividend yield 3.9%, which will augment investor returns quite nicely.
See our latest analysis for Huntington Bancshares
Huntington Bancshares' Payment Has Solid Earnings Coverage
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Huntington Bancshares was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 29.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 57%, which is in the range that makes us comfortable with the sustainability of the dividend.
Huntington Bancshares Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from US$0.04 in 2011 to the most recent annual payment of US$0.60. This works out to be a compound annual growth rate (CAGR) of approximately 31% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Huntington Bancshares has only grown its earnings per share at 3.8% per annum over the past five years. The company has been growing at a pretty soft 3.8% per annum, and is paying out quite a lot of its earnings to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
The company has also been raising capital by issuing stock equal to 45% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
Huntington Bancshares Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Huntington Bancshares might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Huntington Bancshares that investors should take into consideration. We have also put together a list of global stocks with a solid dividend.
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.
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