Hilltop Holdings (NYSE:HTH) Is Due To Pay A Dividend Of $0.18

The board of Hilltop Holdings Inc. (NYSE:HTH) has announced that it will pay a dividend of $0.18 per share on the 29th of August. This means the annual payment will be 2.4% of the current stock price, which is lower than the industry average.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Hilltop Holdings' Payment Expected To Have Solid Earnings Coverage

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

Hilltop Holdings has a good history of paying out dividends, with its current track record at 9 years. Taking data from its last earnings report, calculating for the company's payout ratio of 31%shows that Hilltop Holdings would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 14.8% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 43%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

View our latest analysis for Hilltop Holdings

Hilltop Holdings Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2016, the dividend has gone from $0.24 total annually to $0.72. This implies that the company grew its distributions at a yearly rate of about 13% 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.

Hilltop Holdings May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Hilltop Holdings has seen earnings per share falling at 4.6% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

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. As an example, we've identified 1 warning sign for Hilltop Holdings that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.