A Fresh Look at City Holding's (CHCO) Valuation Following Its 10% Dividend Raise

City Holding (CHCO) just announced a 10% increase in its quarterly dividend, raising it to 87 cents per share for shareholders as of October 15, 2025. This move sends a positive signal about the bank’s outlook and financial stability.

See our latest analysis for City Holding.

City Holding’s 10% dividend hike comes as the bank’s momentum has quietly picked up, with a latest share price of $122.74 and a 1-year total shareholder return of just over 10%. The modest share price moves this year suggest investors are still weighing long-term value against short-term industry headwinds; however, recent actions hint at growing confidence from leadership and a steadying performance over time.

If you’re interested in expanding your search beyond the banking sector, now’s the perfect time to discover fast growing stocks with high insider ownership.

With City Holding trading at an 8% discount to analyst targets and already delivering a steady 10% return over the past year, the question is whether today’s price leaves room for upside or if future growth is already priced in.

Price-to-Earnings of 14.7x: Is it justified?

City Holding’s shares now trade at a price-to-earnings (P/E) ratio of 14.7x, putting it at a premium compared to both industry and peer averages.

The P/E ratio measures how much investors are willing to pay for each dollar of a company’s earnings, and it is especially relevant for banks that typically have steady but modest growth. For City Holding, this relatively high multiple suggests the market is expecting resilience and consistent profit delivery, even as sector-wide uncertainty continues.

Compared to the US Banks industry average of 11.8x and a peer average of 12.2x, City Holding is clearly priced above its closest rivals. This premium is even more apparent when benchmarked against the estimated Fair Price-to-Earnings Ratio of 10.3x, a level the market could return to if investor optimism fades or performance softens.

Explore the SWS fair ratio for City Holding

Result: Price-to-Earnings of 14.7x (OVERVALUED)

However, City Holding’s negative net income growth and recent share price declines could quickly dull investor optimism if these trends continue.

Find out about the key risks to this City Holding narrative.

Another View: Is City Holding Really Undervalued?

While City Holding appears expensive based on its price-to-earnings ratio, the SWS DCF model paints a different picture. According to this cash flow-based approach, shares are trading nearly 37% below estimated fair value. That is a significant disconnect. Does the market see risks the numbers do not?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out City Holding for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own City Holding Narrative

Keep in mind, if you’d like to dig into the details yourself or believe your perspective could be different, you can craft your own in under three minutes, Do it your way.

A great starting point for your City Holding research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

You have a real advantage when you move beyond a single stock and spot fresh opportunities early. See what else could be working for your portfolio right now.

• Unlock attractive yields by checking out these 19 dividend stocks with yields > 3% offering robust dividends above 3% to help boost your passive income strategy.
• Capitalize on the emerging trend in medicine and innovation by exploring these 32 healthcare AI stocks, which is shaping the future of healthcare with artificial intelligence.
• Stay ahead of the tech curve and investigate these 26 quantum computing stocks, which is pushing the boundaries of what is possible in quantum computing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com