Hingham Institution for Savings (NASDAQ:HIFS) Is Due To Pay A Dividend Of $0.63

Hingham Institution for Savings (NASDAQ:HIFS) has announced that it will pay a dividend of $0.63 per share on the 15th of January. This payment means the dividend yield will be 0.9%, which is below the average for the industry.

See our latest analysis for Hingham Institution for Savings

Hingham Institution for Savings' Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Hingham Institution for Savings has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Hingham Institution for Savings' payout ratio sits at 24%, an extremely comfortable number that shows that it can pay its dividend.

Unless the company can turn things around, EPS could fall by 6.8% over the next year. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 28%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $1.36 in 2014 to the most recent total annual payment of $2.52. This implies that the company grew its distributions at a yearly rate of about 6.4% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth May Be Hard To Come By

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Hingham Institution for Savings' EPS has declined at around 6.8% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Our Thoughts On Hingham Institution for Savings' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Hingham Institution for Savings is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.

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. Case in point: We've spotted 2 warning signs for Hingham Institution for Savings (of which 1 is a bit unpleasant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.