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HomeStreet (HMST) Up 3.2% on Dividend Hike & Buyback Expansion

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HomeStreet, Inc.’s (HMST - Free Report) shares gained 3.2% in response to the announcement of a dividend hike and the expansion of its share repurchase program last week. The company declared a quarterly dividend of 35 cent per share, representing a hike of 40% from the prior payout. The dividend will be paid out on Feb 23 to shareholders of record as on Feb 9.

This marks the third dividend hike by HomeStreet. Prior to this, the company had hiked its dividend by 66.7% to 25 cents per share in February 2021.

Considering the last day’s closing price of $48.75, HomeStreet’s dividend yield currently stands at 2.87%. Not only is the yield attractive for income investors, but it also represents a steady income stream.

Apart from dividend hike, HomeStreet announced additional share repurchase authorization worth $75 million. The company plans to fund this with the proceeds from its $100-million subordinated note offering completed on Jan 19. In October 2021, HomeStreet had announced $20-million worth extension of its share buyback plan.

During 2021, the company repurchased 1.87 million shares at an average price of $44.92 per share. The company repurchased 12%, 9% and 9% of its outstanding common stock in 2019, 2020 and 2021, respectively, relative to the outstanding stock at the beginning of each period.

HomeStreet boasts a decent balance sheet. As of Dec 31, 2021, it had long-term debt worth $126 million, and cash and cash equivalents of $65.2 million. The company’s decent liquidity position and low-cost capital structure indicate that it will be able to continue with efficient capital deployment activities, thereby enhancing its shareholder value.

Over the past six months, shares of HMST have rallied 29.4% compared with the industry’s growth of 12.9%.

Zacks Investment ResearchImage Source: Zacks Investment Research

HomeStreet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Banks Taking Similar Steps

Over the past few months, several banks have rewarded shareholders with dividend hikes. Some of these are Farmers National Banc Corp. (FMNB - Free Report) , United Bankshares, Inc. (UBSI - Free Report) and The Community Financial Corporation (TCFC - Free Report) .

Farmers National announced a 27.3% sequential hike in quarterly dividend to 14 cents per share. The dividend was paid out on Dec 31, 2021 to shareholders on record as of Dec 10.

This marked the sixth consecutive quarter of dividend hike by Farmers National. Prior to this, FMNB had hiked its dividend by 10% to 11 cents per share in February 2020.

United Bankshares announced a dividend of 36 cents per share, representing a hike of 2.9% from the prior payout. The dividend was paid out on Jan 3, 2022, to shareholders on record as of Dec 2, 2021.

Prior to this hike, UBSI had increased its quarterly dividend by 2.9% to 35 cents per share in November 2019.

Community Financial announced a 17% sequential hike in its quarterly cash dividend. TCFC paid a dividend of 17.5 cents per share on Jan 24 to its shareholders of record as of Jan 10.

In February 2021, Community Financial hiked its dividend by 20% to 15 cents per share.