Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Huntington Bancshares in Focus
Huntington Bancshares (HBAN) is headquartered in Columbus, and is in the Finance sector. The stock has seen a price change of -11.09% since the start of the year. The regional bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 4.52%. This compares to the Banks - Midwest industry's yield of 2.9% and the S&P 500's yield of 1.72%.
Looking at dividend growth, the company's current annualized dividend of $0.62 is up 2.5% from last year. Huntington Bancshares has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 9.37%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Huntington Bancshares's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBAN for this fiscal year. The Zacks Consensus Estimate for 2022 is $1.46 per share, representing a year-over-year earnings growth rate of 35.19%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HBAN is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Huntington Bancshares Incorporated (HBAN): Free Stock Analysis Report
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