First Horizon (NYSE:FHN) Is Increasing Its Dividend To $0.17
First Horizon Corporation (NYSE:FHN) will increase its dividend from last year's comparable payment on the 1st of April to $0.17. Based on this payment, the dividend yield for the company will be 2.7%, which is fairly typical for the industry.
First Horizon's Dividend Forecasted To Be Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
First Horizon has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but First Horizon's payout ratio of 32% is a good sign as this means that earnings decently cover dividends.
Looking forward, EPS is forecast to rise by 37.1% over the next 3 years. Analysts estimate the future payout ratio will be 26% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Check out our latest analysis for First Horizon
First Horizon Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2016, the dividend has gone from $0.24 total annually to $0.68. This means that it has been growing its distributions at 11% per annum over that time. 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's Growth Prospects Are Limited
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately, First Horizon's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, First Horizon could always pay out a higher proportion of earnings to increase shareholder returns.
First Horizon Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 First Horizon analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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