Huntington Bancshares Incorporated's (NASDAQ:HBAN) investors are due to receive a payment of $0.155 per share on 1st of April. The dividend yield will be 4.1% based on this payment which is still above the industry average.

View our latest analysis for Huntington Bancshares

Huntington Bancshares' Earnings Will Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, Huntington Bancshares has a long history of paying out a part of its earnings to shareholders. Based on Huntington Bancshares' last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 36.1%. The future payout ratio could be 43% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Huntington Bancshares Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from $0.20 total annually to $0.62. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. However, Huntington Bancshares' EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

Overall, a consistent dividend is a good thing, and we think that Huntington Bancshares has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Given that earnings are not growing, the dividend does not look nearly so attractive. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 15 analysts we track are forecasting for the future. Is Huntington Bancshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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