Decoding Huntington Bancshares Inc's Dividend Sustainability: An In-depth Analysis
Unraveling the Past, Present, and Potential Future of HBAN's Dividends
Huntington Bancshares Inc(NASDAQ:HBAN) recently announced a dividend of $0.16 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-15. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Huntington Bancshares Incs dividend performance and assess its sustainability.
Understanding Huntington Bancshares Inc
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Huntington Bancshares is a regional bank holding company headquartered in Columbus, Ohio. The bank has a network of branches and ATMs across eight Midwestern states. Founded in 1866, Huntington National Bank and its affiliates provide consumer, small-business, commercial, treasury management, wealth management, brokerage, trust, and insurance services. Huntington also provides auto dealer, equipment finance, national settlement, and capital market services that extend beyond its core states.
Tracing Huntington Bancshares Inc's Dividend History
Huntington Bancshares Inc has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Huntington Bancshares Inc has increased its dividend each year since 2009. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Assessing Huntington Bancshares Inc's Dividend Yield and Growth
As of today, Huntington Bancshares Inc currently has a 12-month trailing dividend yield of 5.69% and a 12-month forward dividend yield of 5.69%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Huntington Bancshares Inc's annual dividend growth rate was 2.20%. Extended to a five-year horizon, this rate increased to 10.40% per year. And over the past decade, Huntington Bancshares Inc's annual dividends per share growth rate stands at an impressive 16.50%. Based on Huntington Bancshares Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Huntington Bancshares Inc stock as of today is approximately 9.33%.
Is Huntington Bancshares Inc's Dividend Sustainable?
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Huntington Bancshares Inc's dividend payout ratio is 0.40.
Huntington Bancshares Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Huntington Bancshares Inc's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Peeking into Huntington Bancshares Inc's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Huntington Bancshares Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Huntington Bancshares Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Huntington Bancshares Inc's revenue has increased by approximately 3.90% per year on average, a rate that underperforms than approximately 64.21% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Huntington Bancshares Inc's earnings increased by approximately 4.50% per year on average, a rate that underperforms than approximately 63.38% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.10%, which underperforms than approximately 75.19% of global competitors.
Concluding Remarks
From an in-depth analysis of Huntington Bancshares Inc's dividend history, growth rates, payout ratio, and profitability, it's clear that the company has a strong track record of maintaining and growing its dividends. However, its growth metrics relative to global competitors suggest a need for improvement. As an investor, it's crucial to keep an eye on these factors to ensure the sustainability of dividends in the long run. Remember, a robust dividend policy is a sign of a company's financial health and its commitment to shareholder returns.
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This article first appeared on GuruFocus.
