Our analysis is based on comparing Webster Financial Corp. with the following peers – Washington Trust Bancorp, Inc., Brookline Bancorp, Inc., Bankwell Financial Group, Inc., First Bancorp, Inc., Camden National Corporation, Independent Bank Corp., Patriot National Bancorp, Inc., Boston Private Financial Holdings, Inc., Century Bancorp, Inc. Class A and Salisbury Bancorp, Inc. (WASH-US, BRKL-US, BWFG-US, FNLC-US, CAC-US, INDB-US, PNBK-US, BPFH-US, CNBKA-US and SAL-US).
Webster Financial Corp.’s dividend yield is 1.98 percent and its dividend payout is 40.32 percent. This compares to a peer average dividend yield of 2.20 percent and a payout level of 41.39 percent. This relatively lagging dividend performance could spur some dividend action going forward – except the company’s current dividend quality score of 42 out of a possible score of 100 is only about average.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), WBS-US paid a medium quality dividend, which represents a yield of 1.96% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were medium quality and 1 was low quality.
- The ending cash balance, with a dividend coverage of 2.30x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
Quadrant label definitions. Hover to know more
Over the last twelve months (prior to September 30, 2017), WBS-US paid a medium 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 5.01x), investing cash flow (coverage of -10.92x), issuance cash flow (coverage of 7.07x) and twelve-month prior cash (coverage of 2.14x), for a total dividend coverage of 3.30x.
WBS-US’s issuance cash flow includes outflows from net debt repayment (coverage of -10.45x) and net share buybacks (coverage of -0.13x). Thus, the total coverage including share buybacks is 3.43x, 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 net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||1.76||1.75||2.29||2.38||1.8||1.98|
|Dividend Payout (%)||18.82||29.57||36.06||41.4||45.37||40.32|
A complete list of metrics and analysis is available on the company page.
Webster Financial Corp. operates as a holding company for Webster Bank NA. The company engages in providing financial services to individuals, families and businesses. It offers equipment financing, commercial real estate lending and asset-based lending services. The company operates through the following business segments: Commercial Banking, Community Banking, HSA Bank and Private Banking. The Commercial Banking segment includes middle market, asset-based lending, commercial real estate, equipment finance and treasury and payment solutions, which includes government and institutional banking. The Community Banking segment serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. It is comprised of personal banking and business banking supported by a distribution network consisting of banking centers and ATMs, a customer care center, telephone banking and a full range of web and mobile-based banking services. The HSA Bank segment offers health savings accounts, health reimbursement accounts, flexible spending accounts, and other financial solutions for healthcare. The Private Banking segment provides local, full relationship banking that serves high net worth clients, not-for-profit organizations and business clients for asset management, trust, loan, and deposit products and financial planning services. Webster Financial was founded in 1986 and is headquartered in Waterbury, CT.
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