Our analysis is based on comparing Fifth Third Bancorp with the following peers – Huntington Bancshares Incorporated, PNC Financial Services Group, Inc., Wintrust Financial Corporation, Commerce Bancshares, Inc., TCF Financial Corporation, SunTrust Banks, Inc., Wells Fargo & Company, Bank of America Corporation and LCNB Corp. (HBAN-US, PNC-US, WTFC-US, CBSH-US, TCF-US, STI-US, WFC-US, BAC-US and LCNB-US).
Fifth Third Bancorp’s dividend yield is 1.98 percent and its dividend payout is 21.82 percent. This compares to a peer median dividend yield of 1.89 percent and a payout level of 29.78 percent. This relatively higher dividend yield and lower payout ratio makes the company a good candidate for dividend investors looking seeking good current dividend income within this peer group. In addition, the company’s relatively good dividend quality score of 83 out of a possible score of 100, underscores its attractiveness for dividend investors.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), FITB-US paid a high quality dividend, which represents a yield of 1.91% at the current price.
- Dividends paid during each of the last five years were all of medium quality.
- The ending cash balance, with a dividend coverage of 5.03x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2017), FITB-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 5.03x), investing cash flow (coverage of 0.40x), issuance cash flow (coverage of -4.33x) and twelve-month prior cash (coverage of 4.94x), for a total dividend coverage of 6.03x.
FITB-US’s issuance cash flow includes outflows from net debt repayment (coverage of -1.16x) and net share buybacks (coverage of -3.39x). Thus, the total coverage including share buybacks is 9.43x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||2.3||2.18||2.52||2.67||1.99||1.98|
|Dividend Payout (%)||21.69||23.27||30.72||25.87||27.46||21.82|
A complete list of metrics and analysis is available on the company page.
Fifth Third Bancorp engages in the provision of banking and financial services, offers retail and commercial banking, consumer lending services, and investment advisory services through its subsidiary Fifth Third Bank. It operates through the following segments: Commercial Banking, Branch Banking, Consumer Lending, and Wealth and Asset Management. The Commercial Banking segment offers credit intermediation, cash management, and financial services to large and middle-market businesses. The Branch Banking segment includes deposit, loan, and lease products to individuals and small businesses. The Consumer Lending segment comprises of mortgage, home equity, automobile, and indirect lending activities. The Wealth and Asset Management segment provides investment alternatives for individuals, companies, and not-for-profit organizations. The company was founded on October 7, 1974 and is headquartered in Cincinnati, OH.
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