The board of Equitable Holdings, Inc. (NYSE:EQH) has announced that it will be increasing its dividend by 13% on the 9th of June to $0.27, up from last year's comparable payment of $0.24. This makes the dividend yield 1.9%, which is above the industry average.

We've discovered 1 warning sign about Equitable Holdings. View them for free.

Equitable Holdings' Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Equitable Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 145.4%. If the dividend continues on this path, the payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.NYSE:EQH Historic Dividend May 25th 2025

See our latest analysis for Equitable Holdings

Equitable Holdings Doesn't Have A Long Payment History

It is great to see that Equitable Holdings has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $0.52 in 2018 to the most recent total annual payment of $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 9.2% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Equitable Holdings' EPS has fallen by approximately 15% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On Equitable Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think Equitable Holdings will make a great income stock. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Equitable Holdings that you should be aware of before investing. Is Equitable Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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