If you are an income investor, then Huntington Bancshares Incorporated (NASDAQ:HBAN) should be on your radar. Huntington Bancshares Incorporated operates as a holding company for The Huntington National Bank that provides commercial, small business, consumer, and mortgage banking services. Over the past 10 years, the US$14b market cap company has been growing its dividend payments, from $0.040 to $0.56. Currently yielding 4.1%, let’s take a closer look at Huntington Bancshares’s dividend profile.
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
- It is paying an annual yield above 75% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its dividend per share amount has increased over the past
- It can afford to pay the current rate of dividends from its earnings
- It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company’s dividend yield stands at 4.1%, which is high for Banks stocks. But the real reason Huntington Bancshares stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. HBAN has increased its DPS from $0.040 to $0.56 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes HBAN a true dividend rockstar.
The current trailing twelve-month payout ratio for the stock is 41%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 45% which, assuming the share price stays the same, leads to a dividend yield of 4.6%. Moreover, EPS should increase to $1.35.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Investors of Huntington Bancshares can continue to expect strong dividends from the stock. With its favorable dividend characteristics, if high income generation is still the goal for your portfolio, then Huntington Bancshares is one worth keeping around. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for HBAN’s future growth? Take a look at our free research report of analyst consensus for HBAN’s outlook.
- Valuation: What is HBAN worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HBAN is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.