Hawaiian Electric Industries' (NYSE:HE) Dividend Will Be US$0.35

Hawaiian Electric Industries, Inc. (NYSE:HE) will pay a dividend of US$0.35 on the 10th of June. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Hawaiian Electric Industries

Hawaiian Electric Industries' Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. The last payment was quite easily covered by earnings, but it made up 251% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

EPS is set to fall by 4.9% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 65%, which is comfortable for the company to continue in the future.

Hawaiian Electric Industries Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the first annual payment was US$1.24, compared to the most recent full-year payment of US$1.40. This implies that the company grew its distributions at a yearly rate of about 1.2% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Unfortunately, Hawaiian Electric Industries' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Hawaiian Electric Industries' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Hawaiian Electric Industries has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Is Hawaiian Electric Industries 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.