In This Article:
The board of Fifth Third Bancorp (NASDAQ:FITB) has announced that the dividend on 17th of October will be increased to $0.33, which will be 10% higher than last year's payment of $0.30 which covered the same period. This makes the dividend yield about the same as the industry average at 3.4%.
See our latest analysis for Fifth Third Bancorp
Fifth Third Bancorp's Payment Expected To Have Solid Earnings Coverage
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Having distributed dividends for at least 10 years, Fifth Third Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Fifth Third Bancorp's payout ratio of 36% is a good sign as this means that earnings decently cover dividends.
The next 3 years are set to see EPS grow by 24.6%. The future payout ratio could be 35% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Fifth Third Bancorp Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the annual payment back then was $0.32, compared to the most recent full-year payment of $1.20. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Fifth Third Bancorp has been growing its earnings per share at 11% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Fifth Third Bancorp's prospects of growing its dividend payments in the future.
Fifth Third Bancorp Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Fifth Third Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.