First Hawaiian's Dividend at Risk Amid Declining Earnings

First Hawaiian, Inc. is set to go ex-dividend on May 17, 2024, with a planned dividend payment of $0.26 per share. However, the company's dividend prospects are uncertain due to declining earnings and a high payout ratio.

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Aqsa Younas Rana
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First Hawaiian's Dividend at Risk Amid Declining Earnings

First Hawaiian's Dividend at Risk Amid Declining Earnings

First Hawaiian, Inc. (NASDAQ:FHB), a bank holding company based in Honolulu, Hawaii, is set to go ex-dividend on May 17, 2024, with a planned dividend payment of $0.26 per share scheduled for May 31, 2024. However, the company's dividend prospects are facing uncertainty due to declining earnings and a high payout ratio.

Why this matters: The potential dividend cut could have a ripple effect on the broader financial sector, influencing investor sentiment and potentially impacting the overall market. Furthermore, it may also serve as a warning sign for otherindustries with similar financial struggles, prompting them to re-evaluate their dividend policies.

In its fourth-quarter earnings report, First Hawaiian posted a profit of $60 million, with earnings of 44 cents per share. Adjusted earnings, excluding one-time gains and costs, came in at 58 cents per share, surpassing Wall Street expectations. However, the company's revenue of $201.1 million, with revenue net of interest expense at $177.1 million, fell short of analyst forecasts.

For the full year, First Hawaiian reported a profit of $264.4 million, or $1.93 per share, on revenue of $745.3 million. While the company's shares have gained 11% since the start of 2024, they have declined by 20% over the past 12 months.

Analysts' sentiment towards First Hawaiian stock is bearish, with a consensus rating of "Sell" based on two sell ratings and one hold rating from three analysts over the last year. The average twelve-month price target for the stock is $21.75, with a high estimate of $25.00 and a low estimate of $20.00, suggesting a potential upside of just 2.78% from current levels.

Compared to other companies in the Finance sector, analysts are less optimistic about First Hawaiian's prospects, with the consensus rating for the stock lagging behind the average "Hold" rating for the sector. In the past 90 days, Barclays has provided coverage on First Hawaiian stock.

As First Hawaiian grapples with declining earnings and a high payout ratio, investors will be closely watching the company's financial performance and any potential adjustments to its dividend policy. The uncertain dividend outlook serves as a cautionary signal for income-focused investors considering First Hawaiian stock.

Key Takeaways

  • First Hawaiian to go ex-dividend on May 17, 2024, with $0.26/share payment.
  • Dividend prospects uncertain due to declining earnings and high payout ratio.
  • Company's Q4 earnings: $60 million profit, 44 cents/share, revenue fell short.
  • Analysts' sentiment bearish, with "Sell" consensus rating and 2.78% upside.
  • Uncertain dividend outlook a cautionary signal for income-focused investors.