Bank of Hawaii (NYSE:BOH) Has Affirmed Its Dividend Of $0.70

Bank of Hawaii Corporation (NYSE:BOH) will pay a dividend of $0.70 on the 14th of December. This makes the dividend yield 3.7%, which will augment investor returns quite nicely.

Our analysis indicates that BOH is potentially undervalued!

Bank of Hawaii's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Bank of Hawaii has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 50%, which means that Bank of Hawaii would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 11.4%. The future payout ratio could be 48% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Bank of Hawaii Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the annual payment back then was $1.80, compared to the most recent full-year payment of $2.80. This implies that the company grew its distributions at a yearly rate of about 4.5% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Bank of Hawaii has only grown its earnings per share at 4.7% per annum over the past five years. Growth of 4.7% 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.

Bank of Hawaii Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Bank of Hawaii might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 5 analysts we track are forecasting for Bank of Hawaii for free with public analyst estimates for the company. Is Bank of Hawaii 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.