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Read This Before Considering Bank of Hawaii Corporation (NYSE:BOH) For Its Upcoming US$0.67 Dividend

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Simply Wall St
·3 min read
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Bank of Hawaii Corporation (NYSE:BOH) is about to trade ex-dividend in the next four days. If you purchase the stock on or after the 27th of November, you won't be eligible to receive this dividend, when it is paid on the 14th of December.

Bank of Hawaii's next dividend payment will be US$0.67 per share. Last year, in total, the company distributed US$2.68 to shareholders. Last year's total dividend payments show that Bank of Hawaii has a trailing yield of 3.6% on the current share price of $73.92. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Bank of Hawaii can afford its dividend, and if the dividend could grow.

View our latest analysis for Bank of Hawaii

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. Bank of Hawaii is paying out an acceptable 63% of its profit, a common payout level among most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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historic-dividend

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Bank of Hawaii earnings per share are up 2.8% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Bank of Hawaii has lifted its dividend by approximately 4.1% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is Bank of Hawaii worth buying for its dividend? Earnings per share have been growing at a reasonable rate, and the company is paying out a bit over half its earnings as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

So if you want to do more digging on Bank of Hawaii, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 1 warning sign for Bank of Hawaii you should be aware of.

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.

This article by Simply Wall St is general in nature. 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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