It looks like Hingham Institution for Savings (NASDAQ:HIFS) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 4th of October in order to be eligible for this dividend, which will be paid on the 16th of October.
Hingham Institution for Savings's upcoming dividend is US$0.4 a share, following on from the last 12 months, when the company distributed a total of US$2.1 per share to shareholders. Last year's total dividend payments show that Hingham Institution for Savings has a trailing yield of 1.1% on the current share price of $190.3. If you buy this business for its dividend, you should have an idea of whether Hingham Institution for Savings's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Hingham Institution for Savings has a low and conservative payout ratio of just 10.0% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Hingham Institution for Savings's earnings per share have risen 19% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Hingham Institution for Savings has delivered 6.9% dividend growth per year on average over the past ten years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is Hingham Institution for Savings an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Hingham Institution for Savings ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
Curious about whether Hingham Institution for Savings has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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