Hilltop Holdings (NYSE:HTH) Has Announced That It Will Be Increasing Its Dividend To $0.17

Hilltop Holdings Inc. (NYSE:HTH) will increase its dividend from last year's comparable payment on the 28th of February to $0.17. Although the dividend is now higher, the yield is only 2.1%, which is below the industry average.

View our latest analysis for Hilltop Holdings

Hilltop Holdings' Dividend Forecasted To Be Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive.

Hilltop Holdings has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 38%shows that Hilltop Holdings would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 5.9% over the next 12 months. Estimates from analysts also put the future payout ratio of the company at 38% in the next 3 years, which we think can be pretty sustainable going forward.

Hilltop Holdings Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 7 years was $0.24 in 2017, and the most recent fiscal year payment was $0.68. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

We Could See Hilltop Holdings' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Hilltop Holdings has impressed us by growing EPS at 5.9% per year over the past five years. Hilltop Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Hilltop Holdings' Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Hilltop Holdings (of which 1 is significant!) you should know about. Is Hilltop Holdings 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.