Unveiling Fifth Third Bancorp's Dividend Performance and Sustainability
An in-depth analysis of Fifth Third Bancorp's dividend history, yield, growth, and future prospects
Fifth Third Bancorp (NASDAQ:FITB) recently announced a dividend of $0.35 per share, payable on October 16, 2023, with the ex-dividend date set for September 28, 2023. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Fifth Third Bancorp's dividend performance and assess its sustainability.
Company Overview: Fifth Third Bancorp
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Fifth Third Bancorp is a diversified financial-services company headquartered in Cincinnati. The company has over $200 billion in assets and operates numerous full-service banking centers and ATMs throughout Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, and North Carolina.
Fifth Third Bancorp's Dividend History
Fifth Third Bancorp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Fifth Third Bancorp has increased its dividend each year since 2009. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years.
Fifth Third Bancorp's Dividend Yield and Growth
As of today, Fifth Third Bancorp currently has a 12-month trailing dividend yield of 5.33% and a 12-month forward dividend yield of 5.64%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Fifth Third Bancorp's annual dividend growth rate was 10.30%. Extended to a five-year horizon, this rate increased to 15.80% per year. And over the past decade, Fifth Third Bancorp's annual dividends per share growth rate stands at an impressive 13.10%.
Based on Fifth Third Bancorp's dividend yield and five-year growth rate, the 5-year yield on cost of Fifth Third Bancorp stock as of today is approximately 11.10%.
Examining Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of June 30, 2023, Fifth Third Bancorp's dividend payout ratio is 0.38.
Fifth Third Bancorp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Fifth Third Bancorp's profitability 6 out of 10 as of June 30, 2023, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Fifth Third Bancorp's Growth Metrics and Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Fifth Third Bancorp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Fifth Third Bancorp's earnings increased by approximately 0.20% per year on average.
Lastly, the company's 5-year EBITDA growth rate of 2.50%.
Conclusion
In conclusion, Fifth Third Bancorp has demonstrated a solid history of dividend payments, growth, and sustainability. Its impressive dividend growth rate, fair payout ratio, strong profitability, and robust growth metrics make it an attractive option for dividend-focused investors. However, as with all investments, it is advisable to conduct thorough research and consider all relevant factors before making a decision.
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This article first appeared on GuruFocus.
