Huntington Bancshares Hikes Quarterly Dividend 37.5% (HBAN)
By: Ned Piplovic,
After cutting its dividend more than 96% during the financial crisis, Huntington Bancshares, Inc. has been raising its dividend distribution amount again and the current 37.5% payout hike is a significant step towards returning dividend distributions to pre-crisis levels.
In addition to the growing dividends distribution, the company’s share price has been growing as well, albeit at a slightly slower pace. The share price rose slightly more than 10% over the last year and 133% over the last five years. However, this disparity in dividend payout and share price growth rates is driving the dividend yield higher and the company could easily be on its way to 4%-plus dividend yields, which it reached in 2007 prior to the financial crisis.
The rising yield should attract new investors as well, which should fuel its asset appreciation. The company has its next ex-dividend date on December 15, 2017. The pay date is scheduled for the first business day next year on January 2, 2018.
Huntington Bancshares Inc. (NASDAQ:HBAN)
Founded in 1866 and headquartered in Columbus, Ohio, the Huntington Bancshares Incorporated operates as a holding company for The Huntington National Bank, which provides standard banking and lending services in eight Midwest states through five business segments. The Consumer and Business Banking segment offers consumer and small business money accounts, loans, risk protection and treasury management services. The Commercial Banking segment provides corporate risk management, trading and underwriting services, brokerage and agency services for residential and commercial title insurance. Additionally, this segment offers commercial property, casualty, employee benefits, personal, life, disability and specialty insurance. The Commercial Real Estate and Vehicle Finance segment offers various real estate and automotive financing services, as well as automotive dealership inventory financing.
Furthermore, the Regional Banking and The Huntington Private Client Group segment offers wealth management, investment portfolio management and fiduciary administration, as well as trust, institutional and mutual fund custody services. Lastly, the bank’s Home Lending segment offers consumer loans and mortgages. As of September 30, 2017, Huntington Bancshares Incorporated had more than $100 billion in assets, 24 private client group offices, nearly 1,000 traditional and supermarket branches and more than 1,800 Automated Teller Machine (ATM) locations.
The company boosted its quarterly dividend 37.5% from previous quarter’s $0.08 to the current $0.11 payout. This current distribution is equivalent to a $0.44 annualized distribution and yields 3.1%. The current yield is 45.5% higher than the company’s own 1.9% average yield over the last five years and 96% higher than the 1.56% average yield of the companies in the Midwest Regional Banks segment.
During the financial crisis, the company cut its quarterly dividend in half for the third quarter of 2008, then dropped the dividend to $0.01 in the second quarter of 2009 and kept it at that level for 10 consecutive quarters. Since resuming dividend hikes in 2011, the bank has boosted its annual dividend amount at an average rate of 35% per year. Because of this high average growth rate, the total annual dividend payout rose 11-fold over the past eight years.
The share price rose almost 10% between December 1, 2016, and March 1, 2017. After reaching $14.40, the share price reversed trend and dropped 15% towards its 52-week low of $12.18, which it reached on September 7, 2017. However, since the September low, the share price has recovered all its losses, gained 19% and achieved a new 52-week high of $14.48 on November 29, 2017. On December 1, 2017, the share price closed at $14.44 which is 10.8% higher than it was one year ago and 18.6% higher than the September 52-week low.
The combined benefit of rising dividend income and appreciating assets rewarded Huntington Bancshares’ stockholders with a 19% total return over the last 12 months, a 52% total return over the last three years and 155% total return over the last five years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.