In This Article:
Hilltop Holdings Inc.'s (NYSE:HTH) dividend will be increasing from last year's payment of the same period to $0.18 on 27th of February. Despite this raise, the dividend yield of 2.4% is only a modest boost to shareholder returns.
Check out our latest analysis for Hilltop Holdings
Hilltop Holdings' Payment Expected To Have Solid Earnings Coverage
If it is predictable over a long period, even low dividend yields can be attractive.
Having paid out dividends for 8 years, Hilltop Holdings has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Hilltop Holdings' payout ratio of 39% is a good sign for current shareholders as this means that earnings decently cover dividends.
The next 3 years are set to see EPS grow by 5.9%. The future payout ratio could be 42% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Hilltop Holdings Doesn't Have A Long Payment History
The dividend's track record has been pretty solid, but with only 8 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 8 years was $0.24 in 2017, and the most recent fiscal year payment was $0.72. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Hilltop Holdings has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
Dividend Growth May Be Hard To Come By
The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Over the past five years, it looks as though Hilltop Holdings' EPS has declined at around 5.3% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.
Our Thoughts On Hilltop Holdings' Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Hilltop Holdings is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Hilltop Holdings that investors need to be conscious of moving forward. Is Hilltop Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.