Bank of Hawaii Corporation (NYSE:BOH) has pleased shareholders over the past 10 years, by paying out dividends. The stock currently pays out a dividend yield of 3.4%, and has a market cap of US$3.1b. Does Bank of Hawaii tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Bank of Hawaii fit our criteria?
Bank of Hawaii has a trailing twelve-month payout ratio of 45%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 44% which, assuming the share price stays the same, leads to a dividend yield of around 3.4%. Furthermore, EPS should increase to $5.54.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of BOH it has increased its DPS from $1.8 to $2.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Bank of Hawaii generates a yield of 3.4%, which is high for Banks stocks but still below the market’s top dividend payers.
Keeping in mind the dividend characteristics above, Bank of Hawaii is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three fundamental aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for BOH’s future growth? Take a look at our free research report of analyst consensus for BOH’s outlook.
- Valuation: What is BOH worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BOH is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.