Should Income Investors Look At Bank of Hawaii Corporation (NYSE:BOH) Before Its Ex-Dividend?

February 19, 2021
  •  Updated
August 09, 2022
NYSE:BOH
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Bank of Hawaii Corporation (NYSE:BOH) stock is about to trade ex-dividend in 4 days. This means that investors who purchase shares on or after the 25th of February will not receive the dividend, which will be paid on the 12th of March.

Bank of Hawaii's next dividend payment will be US$0.67 per share, on the back of last year when the company paid a total of US$2.68 to shareholders. Based on the last year's worth of payments, Bank of Hawaii stock has a trailing yield of around 3.0% on the current share price of $89.1. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Bank of Hawaii has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Bank of Hawaii

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Bank of Hawaii paid out 69% of its earnings to investors last year, a normal payout level for most businesses.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
NYSE:BOH Historic Dividend February 20th 2021

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Bank of Hawaii's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Bank of Hawaii has lifted its dividend by approximately 4.1% a year on average.

Final Takeaway

Is Bank of Hawaii worth buying for its dividend? Bank of Hawaii's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. We think there are likely better opportunities out there.

Ever wonder what the future holds for Bank of Hawaii? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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