Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Hawaiian Holdings, Inc. (NASDAQ:HA) is about to go ex-dividend in just 3 days. Investors can purchase shares before the 13th of February in order to be eligible for this dividend, which will be paid on the 28th of February.
Hawaiian Holdings’s upcoming dividend is US$0.12 a share, following on from the last 12 months, when the company distributed a total of US$0.48 per share to shareholders. Calculating the last year’s worth of payments shows that Hawaiian Holdings has a trailing yield of 1.7% on the current share price of $28.34. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! As a result, readers should always check whether Hawaiian Holdings has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Hawaiian Holdings has a low and conservative payout ratio of just 10% of its income after tax.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It’s encouraging to see Hawaiian Holdings has grown its earnings rapidly, up 30% a year for the past five years. Hawaiian Holdings looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Hawaiian Holdings dividends are largely the same as they were two years ago.
The Bottom Line
From a dividend perspective, should investors buy or avoid Hawaiian Holdings? Companies like Hawaiian Holdings that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term – as long as it’s done without issuing too many new shares. Overall, Hawaiian Holdings looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Wondering what the future holds for Hawaiian Holdings? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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