Hilltop Holdings (NYSE:HTH) Is Paying Out A Larger Dividend Than Last Year
Hilltop Holdings Inc. (NYSE:HTH) will increase its dividend from last year's comparable payment on the 25th of May to $0.16. This takes the annual payment to 2.1% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Hilltop Holdings
Hilltop Holdings' Earnings Will Easily Cover The Distributions
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Having paid out dividends for 6 years, Hilltop Holdings has a good history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 35%shows that Hilltop Holdings would be able to pay its last dividend without pressure on the balance sheet.
Over the next year, EPS is forecast to fall by 2.4%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 43%, which would be comfortable for the company to continue in the future.
Hilltop Holdings Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was $0.24 in 2017, and the most recent fiscal year payment was $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
Hilltop Holdings Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Hilltop Holdings has grown earnings per share at 5.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Hilltop Holdings' prospects of growing its dividend payments in the future.
In Summary
Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Hilltop Holdings (of which 1 is a bit concerning!) you should know about. Is Hilltop Holdings 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.
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