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Why Huntington Bancshares (HBAN) is a Top Dividend Stock for Your Portfolio

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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 - Free Report) is headquartered in Columbus, and is in the Finance sector. The stock has seen a price change of -19.26% since the start of the year. The regional bank holding company is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 4.98% compared to the Banks - Midwest industry's yield of 2.68% and the S&P 500's yield of 1.63%.

Taking a look at the company's dividend growth, its 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 11.96%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company'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.

HBAN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $1.42 per share, representing a year-over-year earnings growth rate of 31.48%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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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