Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Bank of Hawaii Corporation (NYSE:BOH) is about to go ex-dividend in just 4 days. If you purchase the stock on or after the 28th of August, you won’t be eligible to receive this dividend, when it is paid on the 15th of September.
Bank of Hawaii’s next dividend payment will be US$0.67 per share. Last year, in total, the company distributed US$2.68 to shareholders. Based on the last year’s worth of payments, Bank of Hawaii stock has a trailing yield of around 4.8% on the current share price of $55.36. If you buy this business for its dividend, you should have an idea of whether Bank of Hawaii’s dividend is reliable and sustainable. As a result, readers should always check whether Bank of Hawaii has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Bank of Hawaii
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Bank of Hawaii paid out 58% of its earnings to investors last year, a normal payout level for most businesses.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we’re encouraged by the steady growth at Bank of Hawaii, with earnings per share up 4.4% on average over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Bank of Hawaii has delivered 4.1% dividend growth per year on average over the past 10 years. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
From a dividend perspective, should investors buy or avoid Bank of Hawaii? Earnings per share have been growing at a reasonable rate, and the company is paying out a bit over half its earnings as dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we’re on the fence about its dividend prospects.
However if you’re still interested in Bank of Hawaii as a potential investment, you should definitely consider some of the risks involved with Bank of Hawaii. For example – Bank of Hawaii has 1 warning sign we think you should be aware of.
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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