Webster Financial Corp's Dividend Analysis
Delving Into the Dividend Details of Webster Financial Corp
Webster Financial Corp (NYSE:WBS) recently announced a dividend of $0.4 per share, payable on 2024-02-16, with the ex-dividend date set for 2024-02-02. 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 look into Webster Financial Corp's dividend performance and assess its sustainability.
What Does Webster Financial Corp Do?
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Webster Financial Corp is a full-service provider of financial services, offering commercial and consumer banking, mortgages, and investment advisory along with trust and wealth management services in Connecticut, New York, Rhode Island, Massachusetts, and Pennsylvania. The company's segments include Commercial Banking, HSA Bank, and Consumer Banking. It generates maximum revenue from the Commercial Banking segment.
A Glimpse at Webster Financial Corp's Dividend History
Webster Financial Corp has maintained a consistent dividend payment record since 1987, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2009, earning it the status of a dividend achiever, which is awarded to companies that have increased their dividend for at least the past 15 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Webster Financial Corp's Dividend Yield and Growth
As of today, Webster Financial Corp currently has a 12-month trailing dividend yield of 3.13% and a 12-month forward dividend yield of 3.13%, suggesting an expectation of the same dividend payments over the next 12 months.
Over the past three years, Webster Financial Corp's annual dividend growth rate was 1.50%. Extended to a five-year horizon, this rate increased to 8.90% per year. And over the past decade, Webster Financial Corp's annual dividends per share growth rate stands at an impressive 15.10%.
Based on Webster Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Webster Financial Corp stock as of today is approximately 4.79%.
The Sustainability Question: 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 2023-12-31, Webster Financial Corp's dividend payout ratio is 0.27.
Webster Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Webster Financial Corp's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Webster Financial Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Webster Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Webster Financial Corp's revenue has increased by approximately 3.00% per year on average, a rate that underperforms approximately 70.99% of global competitors.
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, Webster Financial Corp's earnings increased by approximately 6.50% per year on average, a rate that underperforms approximately 57.32% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.00%, which underperforms approximately 44.08% of global competitors.
Next Steps
Considering Webster Financial Corp's history of consistent dividend payments, its status as a dividend achiever, and a moderate dividend growth rate, investors might find the stock to be a reliable source of income. The company's payout ratio and profitability rank suggest a sustainable dividend policy. However, the future growth outlook, indicated by revenue per share and EPS growth rates, presents a mixed picture. Investors should weigh these factors against their investment strategy and risk tolerance. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
