Last update on 2024-06-28

Fulton Financial (FULT) - Dividend Analysis (Final Score: 6/8)

Explore Fulton Financial's (FULT) dividend analysis. With a 6/8 score, learn about stability, yield, growth, and payout ratios for dividend investors.

Short Analysis - Dividend Score: 6

We're running Fulton Financial (FULT) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Fulton Financial (FULT) was analyzed based on their dividend policy using an 8-criteria system. Here's a quick overview of how they performed: 1. **Dividend Yield**: Their current yield is 2.8554%, which is higher than the industry average of 2.76%. This is good for income-focused investors. 2. **Average Annual Growth Rate**: Their 20-year dividend growth rate is 6.36%, but the payouts have been very inconsistent. Some years saw big drops, making it a less stable option. 3. **Payout Ratio**: Mostly below 65% over 20 years, but a negative value in 2008 pulls the average down. Generally, it looks sustainable except for the 2008 anomaly. 4. **Earnings Coverage**: Their dividends have been covered by earnings inconsistently. While there have been improvements since 2016, earlier years show worryingly low coverage. 5. **Cash Flow Coverage**: Generally, their free cash flow hasn’t been enough to cover dividends, which raises sustainability concerns. 6. **Dividend Stability**: They did cut their dividends significantly during the 2008 financial crisis but have shown recovery since then. 7. **Long-Term Payments**: They've paid dividends for over 25 years, which usually indicates resilience. 8. **Stock Repurchases**: Analyzing reliable stock repurchases wasn't detailed in the provided text. In summary, Fulton Financial does show commitment to paying dividends but has had some significant ups and downs, particularly during economic downturns.

Insights for Value Investors Seeking Stable Income

If you're an investor looking for stable and consistent dividend income, you might want to be cautious with Fulton Financial. They do have a history of paying dividends for over 25 years and currently have a slightly higher yield than the industry average, but the past inconsistencies in dividend growth and coverage indicate some risks. These factors are worth considering when deciding to invest.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

dividend yield

Fulton Financial (FULT) displays a current dividend yield of 2.8554%, which is relatively higher than the industry average of 2.76%. This trend is particularly encouraging as maintaining a higher dividend yield benefits income-focused investors and may signify effective capital management. Historically, FULT's dividend yield has shown fluctuations with significant peaks during economic downturns such as in 2008 (6.237%) and in recent challenging periods like 2020 (4.4025%). Comparatively, the industry average has stayed somewhat stable, with a slight upward trend. Hence, FULT's outperformance in the dividend yield metric adds relative strength for dividend-seeking investors.

Average annual Growth Rate higher than 5% in the last 20 years?

Inflation-adjusted dividend growth measures how a company's dividend payout keeps pace with inflation over time. It's crucial for investors seeking to preserve purchasing power.

To determine the 20-year dividend growth rate for Fulton Financial (FULT), we should look at the data provided. The dividend growth as per the provided values appears inconsistent and heavily skewed by extreme values, for instance, a decline of -80% in 2009 and a decrease of -28.78% in 2023. The positive growth years have percentages well below 5% on average. Given the overall average annual dividend growth rate of 6.36%, it would initially appear stable. However, the inconsistency and dramatic swings year-on-year suggest a volatile payout strategy. Overall, this would be considered a negative indicator as investors typically prefer stability, and it doesn’t sufficiently guarantee fulfilling the >5% growth criterion due to observed volatility.

Average annual Payout Ratio lower than 65% in the last 20 years?

The payout ratio measures the proportion of earnings a company pays to shareholders in dividends. A lower payout ratio generally suggests a company's earnings are sufficient to maintain dividend payouts.

Fulton Financial (FULT) has had a widely varying payout ratio over the past 20 years, reflected in an average payout ratio of -48.44%. Notably, a significant outlier in 2008 skews the average negatively. In most analyzed years, the payout ratio remains below 65%, often oscillating within a healthy range between 30-50%. Thus, disregarding 2008's extreme anomaly, FULT maintains an acceptable payout ratio indicative of potential sustainability in dividend payouts. Nevertheless, the economics influencing 2008 warrants further examination to understand risks and impacts better.

Dividends Well Covered by Earnings?

This criterion assesses whether a company's dividends are adequately supported by its earnings. Generally, a ratio below 1 indicates that earnings are sufficient to cover the dividend payments.

The analysis of Fulton Financial from 2003 to 2023 reveals a varied performance in its ability to cover dividends with earnings. While the ratio remained above the desirable threshold (0.54 to 0.682) from 2003 to 2007, the company's financial health deteriorated in 2008 with a negative ratio (-18.69) primarily due to incurring losses. Post-2009, the ratios varied, fluctuating around 0.18 to 0.510. Notably, the ratio improved after 2016, hovering near 0.4 to 0.5 range, which is a positive sign. However, the low coverage in multiple years indicates instability. Overall, FULT's trend shows improvement but also highlights significant periods of risk, making it imperative to monitor future earnings closely.

Dividends Well Covered by Cash Flow?

This criterion examines whether the company's free cash flow sufficiently covers the dividend payout. A ratio above 1 suggests good coverage, while below 1 may imply potential issues.

From 2003 to 2023, Fulton Financial's dividend coverage ratio has largely been below 1, indicating that free cash flow doesn't sufficiently cover dividends in most years. Coverage peaked in 2019 with a ratio nearing 1 (0.98), which is positive. However, recent years show lower coverage (0.35 in 2023), suggesting potential risks in sustaining current dividend payouts. Generally, these trends are worrisome for the long-term sustainability of dividends.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Analyzing Fulton Financial's past 20 years of dividends per share, we observe some key trends. Starting with a dividend of $0.452 in 2003, FULT's dividends increased steadily until the financial crisis of 2008, peaking at $0.6. However, during the financial crisis, there was a significant decrease, with dividends plummeting to $0.12 in 2009 and remaining at that level in 2010. Given the severe economic downturn, this drastic cut was not uncommon among financial institutions. Since then, Fulton Financial's dividends have exhibited a recovering trend, climbing back gradually to reach as high as $0.66 in 2022 before a minor drop to $0.47 in 2023. While the 2008-2009 period did see a decrease greater than 20%, the bank's recent history shows a commitment to returning value to shareholders post-crisis. On a positive note, post-2010, FULT's dividend growth has been stabilizing and even demonstrating resilience as it navigates new economic conditions. Nonetheless, cautious investors would take into account the earlier instability while assessing the overall sustainability of future dividends.

Dividends Paid for Over 25 Years?

Explain the criterion for Fulton Financial (FULT) and why it is important to consider

The consistency of dividend payments over a long period, such as 25 years, signals financial stability and a strong commitment to returning value to shareholders. It also indicates resilience through economic cycles.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years?

Examining the criterion of reliable stock repurchases over 20 years is crucial as it indicates a company's commitment to return value to shareholders. Buying back shares reduces the number of shares outstanding, potentially increasing earnings per share and providing support to the stock price.