On the 01 October 2018, Huntington Bancshares Incorporated (NASDAQ:HBAN) will be paying shareholders an upcoming dividend amount of US$0.14 per share. However, investors must have bought the company’s stock before 14 September 2018 in order to qualify for the payment. That means you have only 4 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Huntington Bancshares’s latest financial data to analyse its dividend attributes.
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Huntington Bancshares pass our checks?
The current trailing twelve-month payout ratio for the stock is 33.9%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect HBAN’s payout to increase to 43.4% of its earnings, which leads to a dividend yield of 3.5%. Moreover, EPS should increase to $1.31. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Huntington Bancshares generates a yield of 3.4%, which is high for Banks stocks but still below the market’s top dividend payers.
Taking into account the dividend metrics, Huntington Bancshares ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three fundamental factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for HBAN’s future growth? Take a look at our free research report of analyst consensus for HBAN’s outlook.
- Valuation: What is HBAN 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 HBAN 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 firstname.lastname@example.org.