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Fifth Third (FITB) Cheers Investors With 11% Dividend Hike
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Fifth Third Bancorp (FITB - Free Report) has followed through with its previous dividend hike plans and has raised its quarterly cash dividends by 11%. The company will now pay out a dividend of 30 cents per share, up from 27 cents disbursed in the prior quarter. The third-quarter dividend will be paid out on Oct 15 to its shareholders of record as of Sep 30, 2021.
Based on the raised rate, the annual dividend came to $1.20 a share, resulting in an annualized yield of 3%, considering the company’s closing price of $39.58 on Sep 13. The hike was driven by the company clearing this year’s stress test. The dividend was last hiked by 12.5% to 27 cents per share in February 2020. Such hikes reflect the company’s strong cash generation capabilities and its commitment to return value to shareholders.
Also, it continues to repurchase shares under the 100-million share buyback program announced in June 2019 and it plans to buy back shares totaling $850 million in the second half of 2021. It must be noted that amid the coronavirus-induced economic slowdown, share buyback activities were suspended in mid-March 2020.
Fifth Third witnessed earnings growth of 8.8% in the last three to five years. The earnings momentum is likely to continue in the near term as indicated by the company’s projected earnings per share (EPS) growth rate of 69.4% for the ongoing year.
The company’s liquidity position also seems decent and indicates that there is ample scope to sustain the hiked dividend. Cash and due from banks stood at $3.29 billion as of the second-quarter end, while times interest earned ratio of 8.8 has increased over the past few quarters, with some volatility.
As of Aug 6, the company’s senior debt enjoyed investment-grade credit ratings of BBB+, A- and Baa1 as well as a stable outlook from Standard & Poor’s, Fitch, and Moody’s, respectively. This will likely enable it to access the debt market at favorable rates.
Fifth Third has been making efforts to reduce its debt. It had long-term debt of $12.4 billion, which has been reduced over the past few quarters. Therefore, with a decent cash position, we believe that Fifth Third has a lesser likelihood of default of interest and debt repayments in the near term, even if the economic situation worsens.
Also, the debt/equity ratio of 59% compares favorably with 64% of the industry average. Improving financial health of the company will help it perform better under a dynamic business environment.
Aside from this, the company has been making efforts to strengthen top-line growth. It has expanded its non-interest income base over the years with help of strategic investments through North Star initiatives and MB Financial’s buyout, which are expected to result in revenue growth, expense savings and operational excellence. Additionally, Fifth Third remains focused on executing other measures, including branch consolidation.
Hence, driven by strategic efforts, strong earnings performance, and lower preference for bank acquisitions; the company remains focused on capital deployments and enhancing shareholder value.
Shares of Fifth Third have jumped 80.9% in the past year compared with 58.7% growth recorded by the industry.
Image Source: Zacks Investment Research
Competitive Landscape
Last month, several finance companies raised their quarterly dividends.
TFS Financial Corporation’s (TFSL - Free Report) board of directors approved a 0.9% increase in the company’s quarterly dividend to 28.25 cents per share from 28 cents per share. The hiked dividend will be paid out on Sep 21 to stockholders of record as of Sep 7, 2021.
Spirit of Texas Bancshares, Inc. announced that its board of directors approved a dividend hike. The quarterly common stock dividend has been increased by 33.3% to 12 cents per share. The dividend will be paid out on Sep 24 to shareholders of record as of Sep 10.
Virtus Investment Partners, Inc. (VRTS - Free Report) increased its regular quarterly cash dividend. The company announced a dividend of $1.50 per share, representing an 83% hike from the prior payout. The dividend will be paid out on Nov 12 to shareholders of record as of Oct 29, 2021.
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Fifth Third (FITB) Cheers Investors With 11% Dividend Hike
Fifth Third Bancorp (FITB - Free Report) has followed through with its previous dividend hike plans and has raised its quarterly cash dividends by 11%. The company will now pay out a dividend of 30 cents per share, up from 27 cents disbursed in the prior quarter. The third-quarter dividend will be paid out on Oct 15 to its shareholders of record as of Sep 30, 2021.
Based on the raised rate, the annual dividend came to $1.20 a share, resulting in an annualized yield of 3%, considering the company’s closing price of $39.58 on Sep 13. The hike was driven by the company clearing this year’s stress test. The dividend was last hiked by 12.5% to 27 cents per share in February 2020. Such hikes reflect the company’s strong cash generation capabilities and its commitment to return value to shareholders.
Also, it continues to repurchase shares under the 100-million share buyback program announced in June 2019 and it plans to buy back shares totaling $850 million in the second half of 2021. It must be noted that amid the coronavirus-induced economic slowdown, share buyback activities were suspended in mid-March 2020.
Investors interested in this Zacks Rank #3 (Hold) stock can have a look at the company’s fundamentals and growth opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fifth Third witnessed earnings growth of 8.8% in the last three to five years. The earnings momentum is likely to continue in the near term as indicated by the company’s projected earnings per share (EPS) growth rate of 69.4% for the ongoing year.
The company’s liquidity position also seems decent and indicates that there is ample scope to sustain the hiked dividend. Cash and due from banks stood at $3.29 billion as of the second-quarter end, while times interest earned ratio of 8.8 has increased over the past few quarters, with some volatility.
As of Aug 6, the company’s senior debt enjoyed investment-grade credit ratings of BBB+, A- and Baa1 as well as a stable outlook from Standard & Poor’s, Fitch, and Moody’s, respectively. This will likely enable it to access the debt market at favorable rates.
Fifth Third has been making efforts to reduce its debt. It had long-term debt of $12.4 billion, which has been reduced over the past few quarters. Therefore, with a decent cash position, we believe that Fifth Third has a lesser likelihood of default of interest and debt repayments in the near term, even if the economic situation worsens.
Also, the debt/equity ratio of 59% compares favorably with 64% of the industry average. Improving financial health of the company will help it perform better under a dynamic business environment.
Aside from this, the company has been making efforts to strengthen top-line growth. It has expanded its non-interest income base over the years with help of strategic investments through North Star initiatives and MB Financial’s buyout, which are expected to result in revenue growth, expense savings and operational excellence. Additionally, Fifth Third remains focused on executing other measures, including branch consolidation.
Hence, driven by strategic efforts, strong earnings performance, and lower preference for bank acquisitions; the company remains focused on capital deployments and enhancing shareholder value.
Shares of Fifth Third have jumped 80.9% in the past year compared with 58.7% growth recorded by the industry.
Image Source: Zacks Investment Research
Competitive Landscape
Last month, several finance companies raised their quarterly dividends.
TFS Financial Corporation’s (TFSL - Free Report) board of directors approved a 0.9% increase in the company’s quarterly dividend to 28.25 cents per share from 28 cents per share. The hiked dividend will be paid out on Sep 21 to stockholders of record as of Sep 7, 2021.
Spirit of Texas Bancshares, Inc. announced that its board of directors approved a dividend hike. The quarterly common stock dividend has been increased by 33.3% to 12 cents per share. The dividend will be paid out on Sep 24 to shareholders of record as of Sep 10.
Virtus Investment Partners, Inc. (VRTS - Free Report) increased its regular quarterly cash dividend. The company announced a dividend of $1.50 per share, representing an 83% hike from the prior payout. The dividend will be paid out on Nov 12 to shareholders of record as of Oct 29, 2021.