Fulton Financial Corporation’s FULT board of directors has announced a special cash dividend of 4 cents per share. The dividend will be paid on Dec 16, to shareholders on record as of Dec 4.
The company began paying special dividends from 2014. It started with a payment of 2 cents per share and thereafter, hiked the amount to 3 cents per share in 2017. Further, in 2018, Fulton Financial increased its special dividend to 4 cents per share.
Apart from special dividends, Fulton Financial consistently pays quarterly cash dividends. Since 2011, the company has been increasing its quarterly dividend on a regular basis. The most recent hike of 8.3% to 13 cents per share was announced in March 2019.
Besides Fulton Financial, there are several other financial institutions that have efficient capital-deployment plans in place. Some of these including United Bankshares, Inc. UBSI, Bank OZK OZK and Eaton Vance Corporation EV have recently hiked their quarterly dividends.
Moreover, Fulton Financial has a share-repurchase plan in place. In October 2019, the company authorized $100 million worth share-buyback plan, expiring on Dec 31, 2020. Prior to this, the company had authorized share buyback worth $100 million in March that was completed in October.
Shares of Fulton Financial have rallied 5.5% over the past six months, outperforming the industry’s growth of 5.4%.
So, is the stock worth considering to earn this special dividend? For this, we need to dig a bit deeper, and look at this Zacks Rank #3 (Hold) stock’s fundamentals and growth prospects. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Fulton Financial’s earnings have witnessed 11.1% growth over the past three to five years. This uptrend is anticipated to continue as the company’s earnings will likely be up 19.5% in 2019.
Organic growth remains a key strength for Fulton Financial. The top line witnessed a five-year CAGR of 5.7% (2014-2018). Also, its projected sales growth rate of 9.6% for 2019 indicates continuation of the momentum.
Fulton Financial’s debt/equity ratio of 0.31 is lower than its industry’s average of 0.40. This reflects the company’s financial stability amid adverse economic situations.
Moreover, the stock looks undervalued, with respect to its price/earnings (P/E) (F1) and price/sales (P/S) ratios. It has a P/E (F1) ratio of 12.21, which is below the industry average of 12.63. Also, its P/S ratio of 2.74 is lower than the industry average of 2.88.
However, mounting non-interest expenses are concerns. Over the last five years (ended 2018), expenses witnessed a CAGR of 4.4%. This trend continued during the first nine months of 2019 as well. As the company grows inorganically and invests in banking franchise, expenses are likely to remain on the higher side.
Although the company’s net interest margin expanded in the first three quarters of 2019, the same is expected to be under pressure due to a low interest-rate environment. This is expected to impede net interest income growth.
Based on the above-mentioned factors, Fulton Financial seems to have promising prospects. However, one must keep an eye on concerns related to lower interest rates and elevated expense levels.
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Fulton Financial Corporation (FULT) : Free Stock Analysis Report
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