HCI Group's (NYSE:HCI) Dividend Will Be US$0.40

The board of HCI Group, Inc. (NYSE:HCI) has announced that it will pay a dividend of US$0.40 per share on the 17th of September. This payment means the dividend yield will be 1.8%, which is below the average for the industry.

Check out our latest analysis for HCI Group

HCI Group's Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, HCI Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Unless the company can turn things around, EPS could fall by 1.4% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 40%, which is definitely feasible to continue.

HCI Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from US$0.40 in 2011 to the most recent annual payment of US$1.60. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. HCI Group hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, a consistent dividend is a good thing, and we think that HCI Group has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for HCI Group (of which 1 is a bit concerning!) you should know about. We have also put together a list of global stocks with a solid dividend.

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