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 July. This makes the dividend yield 5.0%, which will augment investor returns quite nicely.

Check out 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.

Huntington Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Huntington Bancshares' payout ratio of 55% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 40.2%. Analysts forecast the future payout ratio could be 47% over the same time horizon, which is a number we think the company can maintain.

Huntington Bancshares Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.20 in 2014 to the most recent total annual payment of $0.62. This means that it has been growing its distributions at 12% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Huntington Bancshares has seen earnings per share falling at 2.2% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Huntington Bancshares' Dividend

Overall, a consistent dividend is a good thing, and we think that Huntington Bancshares has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Huntington Bancshares that investors should know about before committing capital to this stock. 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.

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