Huntington Bancshares (NASDAQ:HBAN) announced that it will pay out dividends with an attractive yield of approximately 5.7% on January 2nd. This comes amid forecasts that its earnings per share (EPS) could see a decline of nearly one-fifth over the next three years. However, the company's track record and analysts' perspectives indicate a sustainable payout ratio, expected to stay below fifty percent.
The bank has a history of rewarding shareholders, consistently increasing its dividends annually by about fifteen percent since 2013. Alongside this, Huntington has achieved steady earnings growth, averaging just over three percent each year for the past five years. These figures underscore the firm's commitment to enhancing shareholder value and provide a basis for confidence in the resilience of its dividend payments facing potential future earnings challenges.
InvestingPro Insights
Huntington Bancshares' commitment to shareholder returns is further highlighted by their impressive track record of raising dividends for 12 consecutive years, as noted by InvestingPro Tips. This, coupled with a high earnings quality where free cash flow exceeds net income, suggests a robust financial footing. The company also stands out for its high returns on book equity, reinforcing the attractiveness of its stock to shareholders.
From a valuation standpoint, Huntington is trading at a low P/E ratio of just 7.22, and an even lower adjusted P/E ratio for the last twelve months as of Q3 2023 at 6.75, according to InvestingPro Data. This low earnings multiple could indicate a potential undervaluation, especially when considering the company's near-term earnings growth. Additionally, the PEG ratio for the same period is at a modest 0.42, suggesting that the stock may be a favorable growth-at-a-reasonable-price (GARP) candidate.
InvestingPro subscribers can access even more insights to inform their investment decisions. Currently, there are over 10 additional InvestingPro Tips available for Huntington Bancshares, offering deeper analysis and perspectives. And with the InvestingPro subscription now on a special Black Friday sale, investors can unlock these valuable tips at a discount of up to 55%. This is an opportune time to gain comprehensive insights into companies like Huntington, which has maintained dividend payments for an impressive 53 consecutive years, and is predicted by analysts to remain profitable this year.
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