April 27, 2025 a 03:31 am
FITB: Dividend Analysis - Fifth Third Bancorp
Fifth Third Bancorp demonstrates a robust dividend profile with a respectable yield of 3.72% and an extensive dividend history of 42 years without recent cuts. The company's dividend growth over the past five years, coupled with a moderate payout ratio, showcases a sustainable dividend policy. Despite some leverage concerns, Fifth Third Bancorp maintains financial strength to support its dividend strategy.
Overview 📊
Fifth Third Bancorp operates within the financial sector, known for its stability and income generation. The bank's dividend yield of 3.72% reflects a solid income opportunity amidst low interest rates, with a current dividend of 1.72 USD per share. Its 42-year uninterrupted dividend history emphasizes reliability, even though last adjustments weren't recent.
| Attribute | Value |
|---|---|
| Sector | Financial |
| Dividend Yield | 3.72% |
| Current Dividend per Share | 1.72 USD |
| Dividend History | 42 years |
| Last Cut or Suspension | None |
Dividend History 📈
Consistent dividend payments underpin investor confidence in Fifth Third Bancorp’s financial health. The absence of a cut or suspension in recent years is a testament to its robust cash flow and management's dedication to shareholders' returns.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.37 |
| 2024 | 1.44 |
| 2023 | 1.36 |
| 2022 | 1.26 |
| 2021 | 1.14 |
Dividend Growth 📉
The Bank's five-year average dividend growth rate of 8.90% suggests steady income progression, aligning with shareholder wealth enhancement strategies. An ongoing growth trend is indicative of management's confidence in future cash flows.
| Time | Growth |
|---|---|
| 3 years | 8.10% |
| 5 years | 8.90% |
The average dividend growth is 8.90% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio ✅
Evaluating Fifth Third's payout ratios, we see a balanced approach with 50.82% EPS-based and 47.79% FCF-based ratios, signifying a healthy cushion for dividend sustainability.
| Key figure | Ratio |
|---|---|
| EPS-based | 50.82% |
| Free cash flow-based | 47.79% |
The EPS and FCF payout ratios are optimal, illustrating prudent financial management and the firm's ability to comfortably cover dividends with earnings and cash flow.
Cashflow & Capital Efficiency 🔍
Fifth Third's efficient capital allocation is evident in its free cash flow yield and conversion metrics. While the CAPEX to operating cash flow ratio is competitive, maintaining control over stock-based compensation helps preserve capital stability.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 8.36% | 16.92% | 25.42% |
| Earnings Yield | 8.02% | 9.95% | 10.83% |
| CAPEX to Operating Cash Flow | 14.66% | 11.44% | 10.66% |
| Stock-based Compensation to Revenue | 1.99% | 2.06% | 1.99% |
| Free Cash Flow / Operating Cash Flow Ratio | 85.34% | 88.56% | 89.34% |
With consistent free cash flow yields and a balanced capital expenditure strategy, the company positions itself well for ongoing capital efficiency and shareholder value enhancement.
Balance Sheet & Leverage Analysis 🔍
Fifth Third's balance sheet shows a responsible approach to leverage, with debt ratios maintained at feasible levels. Notably, their healthy quick and current ratios signify robust liquidity.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 22.65% | 98.62% | 107.07% |
| Debt-to-Assets | 2.09% | 8.81% | 8.94% |
| Debt-to-Capital | 18.47% | 49.65% | 51.71% |
| Net Debt to EBITDA | N/A | 4.54 | 4.27 |
| Current Ratio | 0 | 0.34 | 15.88 |
| Quick Ratio | 9.56 | 0.34 | 18.75 |
| Financial Leverage | 10.84 | 11.19 | 11.97 |
Sound ratios across the board suggest Fifth Third is equipped to handle its debts efficiently while securing operational leverage.
Fundamental Strength & Profitability 🚀
Fifth Third's solid returns on equity and assets, combined with a notable profit margin, imply effective management and profitability. The Bank's efficient cost control further enhances its margins.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 11.78% | 12.25% | 14.12% |
| Return on Assets | 1.09% | 1.09% | 1.18% |
| Net Margin | 28.04% | 28.66% | 29.49% |
| EBIT Margin | -5.99% | 36.46% | 37.29% |
| EBITDA Margin | N/A | 42.33% | 42.54% |
| Gross Margin | 126.33% | 154.25% | 100.00% |
| R&D to Revenue | 0% | 0% | 0% |
Fifth Third's profitability metrics highlight the bank's operational strength and potential for future growth, facilitating continued dividend viability.
Price Development 📉
Dividend Scoring System ⚠️
| Criterion | Score | Indicator |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 4 | |
| Financial Stability | 3 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 32/40
Rating 🗣️
Fifth Third Bancorp's enduring dividend track record, coupled with moderate dividend growth and a responsible payout strategy, makes it an appealing choice for income-focused investors. Nonetheless, investors should remain attentive to the bank's leverage and macroeconomic factors influencing the financial sector. Overall, it earns a strong "Buy" rating for its reliable income potential.