Huntington Bancshares' (NASDAQ:HBAN) Dividend Will Be $0.155

The board of Huntington Bancshares Incorporated (NASDAQ:HBAN) has announced that it will pay a dividend of $0.155 per share on the 1st of April. This makes the dividend yield 4.6%, which will augment investor returns quite nicely.

See our latest analysis for Huntington Bancshares

Huntington Bancshares' Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having distributed dividends for at least 10 years, Huntington Bancshares has a long history of paying out a part of its earnings to shareholders. Based on Huntington Bancshares' last earnings report, the payout ratio is at a decent 49%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 30.0%. Analysts forecast the future payout ratio could be 44% over the same time horizon, which is a number we think the company can maintain.

Huntington Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.20 in 2014, and the most recent fiscal year payment was $0.62. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Huntington Bancshares' EPS was effectively flat over the past five years, which could stop the company from paying more every year. Growth of 0.5% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like Huntington Bancshares' Dividend

Overall, we like to see the dividend staying consistent, and we think Huntington Bancshares might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 17 Huntington Bancshares analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.