Last update on 2024-06-27

Huntington Bancshares (HBAN) - Dividend Analysis (Final Score: 6/8)

In-depth analysis of Huntington Bancshares (HBAN) dividend policy using an 8-criteria scoring system, concluding with a solid 6/8 final score.

Short Analysis - Dividend Score: 6

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

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?

Analysis of dividend yield helps determine the return an investor is earning per dollar invested in the company. A higher dividend yield relative to the industry can imply a better return on investment.

Huntington Bancshares (HBAN) exhibits a current dividend yield of 4.8742%, which substantially exceeds the industry average of 2.76%. This trend is historically significant given that the bank's yield has consistently hovered above industry averages over 20 years, except for a period post-2008 financial crisis (2009-2011). The trend exemplifies resilience in maintaining investor returns even when the bank's stock price experienced downturns, e.g., stock price at $7.66 in 2008 with a dividend yield of 8.6684%. Such strong yield consistency, despite periodic volatilities like in 2009 (yield at 1.0959%), underscores investor confidence and a strong dividend policy.

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

The Dividend Growth Rate is a measure of the yearly percentage growth rate of a company’s dividend payments. It is a critical criterion as it shows the potential for income growth for investors. A rate higher than 5% indicates a strong and growing dividend payout, enhancing the company's attractiveness to dividend investors.

Evaluating the dividend growth rate for Huntington Bancshares (HBAN) over the past 20 years, we see an erratic trend in the dividend per share ratio. Individual yearly values oscillated substantially, with some extreme fluctuations like -93.9759% in 2009 and -37.3585% in 2008, amid more modest increases such as 3.4483% in 2020 and 2.4793% in 2022. Overall, the average dividend ratio stands at 13.973%, which on the surface may seem favorable based on its average growth rate. However, the volatility suggests a lack of consistency in dividend payouts. While an average growth rate above 5% is typically positive, the inconsistency marked by periods of extreme reductions undermines reliability. Therefore, only considering the average dividend growth rate might be misleading; investors should be cautious of the substantial annual fluctuations in Huntington Bancshares' dividend payments. Hence, even though the average rate exceeds 5%, the presence of significant declines and high volatility in their dividend growth rate makes the trend less favorable.

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

The payout ratio signifies the proportion of earnings a company distributes to its shareholders in the form of dividends, showing sustainability and financial health.

The data indicates that Huntington Bancshares' payout ratio over the last 20 years averages at 43.21%, well below the 65% threshold. This trend is favorable as it demonstrates the company’s disciplined approach to dividend payouts, which is sustainable and indicates room for growth and investment. Notably, the abnormally high and negative ratios in 2007-2010 were due to the financial crisis, reflecting stress in earnings. Other than these extraordinary years, the ratios consistently stayed within manageable levels.

Dividends Well Covered by Earnings?

Explain the criterion for Huntington Bancshares (HBAN) and why it is important to consider

Dividends pers Share covered by Earnings per Share: [0.41669258038435225, 0.4396506243038865, 0.47875354107648727, 0.5201831044527674, 4.279370205894227, -2.1364221364221363, -0.0068877638874539375, 0.0934361130576968, 0.1598976654940838, 0.21551724137931036, 0.2510570824524313, 0.2766433934922935, 0.294811320754717, 0.37433845359493995, 0.3353132784058248, 0.458370904718966, 0.42703578265351194, 0.7469189592929166, 0.5897835835445505, 0.39927872230808864, 0.45953157426623187]

Dividends Well Covered by Cash Flow?

Determine if Huntington Bancshares can comfortably cover its dividend payments through free cash flow.

Free Cash Flow (FCF) and Dividend Payout are vital indicators of a company’s financial health, especially when analyzing the sustainability and reliability of dividend payments. If a company generates ample FCF, it meets its dividend obligations without resorting to debt or external financing, highlighting financial prudence and resilience. Analyzing HBAN's data, from 2003 to 2023, 2022 shows the highest FCF at $3.813 billion and a Dividend Payout of $1.01 billion. The ratio of dividend coverage with cash flow significantly fluctuates, spiking in 2006 with a ratio of 1.303 and plummeting to -0.641 in 2007. A coverage ratio above 1 is ideal (the higher, the safer), implying more cash flow generated than payout demands. Lower coverage ratios or negative values indicate potential issues in sustainably paying dividends. In sum, although there are lapses, the recent positive trends portray a stable prospect of dividend payments by HBAN.

Stable Dividends Since the Company Began Paying Dividends?

criteria for Huntington Bancshares (HBAN) Stable Dividends Over the Past 20 Years and why it is important to consider

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.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years indicates the longevity and sustainability of a company's dividend payments.

Huntington Bancshares has successfully paid dividends for over 25 years, from 1998 to 2023. This demonstrates a strong commitment to returning value to shareholders, showing consistency even through varied economic conditions. This trend is generally positive, suggesting that the bank has a solid financial foundation and the ability to generate steady profits. Moreover, the dividend per share has seen a recovery post-2008 financial crisis, picking up from $0.04 in 2009 to $0.62 in recent years. Such a long track record is attractive to dividend-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate that a company is committed to returning capital to shareholders and maintains a strong cash flow, which is beneficial for long-term investors. It reduces the number of outstanding shares, potentially increasing the value of the remaining shares.

Over the past 20 years, Huntington Bancshares (HBAN) has demonstrated several years of share repurchases. Notably, the number of outstanding shares decreased in the years 2005, 2012, 2013, 2014, 2015, 2018, 2019, and 2020, indicating periods of buybacks. However, the trend also shows significant share issuances or lack of buybacks in other years, particularly from 2007 to 2011, and again from 2016 onwards. The average repurchase rate of 10.5073% is a positive indicator, suggesting consistency in returning value to shareholders, though the periods of high issuance reflect a mixed reliability overall. This could be viewed as a moderate trend where the reliability is noteworthy but not perfectly consistent, impacting investor confidence accordingly.