Huntington Bancshares Incorporated's (NASDAQ:HBAN) investors are due to receive a payment of $0.155 per share on 3rd of October. This means the annual payment is 4.6% of the current stock price, which is above the average for the industry.
Huntington Bancshares' Earnings Will Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.
Having distributed dividends for at least 10 years, Huntington Bancshares has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 54%, which means that Huntington Bancshares would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, EPS is forecast to rise by 28.6% over the next 3 years. Analysts forecast the future payout ratio could be 46% 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 an extended history of paying stable dividends. The dividend has gone from an annual total of $0.16 in 2012 to the most recent total annual payment of $0.62. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. 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.
We Could See Huntington Bancshares' Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Huntington Bancshares has grown earnings per share at 9.3% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We Really Like Huntington Bancshares' Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Huntington Bancshares that you should be aware of before investing. Is Huntington Bancshares not quite the opportunity you were looking for? Why not check out our selection of top 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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