Updated 3/6/25
City Holding Company (CHCO) is a regional bank that has built a strong reputation for financial stability and steady shareholder returns. Based in West Virginia, the company operates City National Bank, serving personal and commercial banking needs across its footprint. Unlike larger banks that chase aggressive expansion, CHCO has focused on consistency, profitability, and returning value to shareholders through dividends.
For those looking for a reliable income stock, CHCO presents an appealing option. Its track record of paying dividends, solid financial position, and conservative management approach make it a compelling choice for investors who prioritize stability over speculation.
Key Dividend Metrics
📈 Dividend Yield: 2.73% (Forward)
💰 Annual Dividend: $3.16 per share
🔄 Dividend Growth (5-Year Avg.): 2.89%
📊 Payout Ratio: 37.20%
📆 Last Dividend Paid: January 31, 2025
📅 Ex-Dividend Date: January 15, 2025
These figures highlight a steady, dependable dividend, but there’s more to the story. Let’s explore what makes CHCO a strong dividend stock and what risks investors should keep in mind.
Dividend Overview
CHCO has a long history of paying dividends, which is always a positive sign for income investors. The company’s current yield of 2.73% is not the highest in the banking sector but is comfortably above the broader market average.
What sets CHCO apart is its consistency. While some banks have had to cut or suspend dividends during financial downturns, CHCO has remained committed to rewarding shareholders. That level of dependability is valuable, especially for investors who rely on dividends as part of their income strategy.
Dividend Growth and Safety
A good dividend stock isn’t just about how much it pays today—it’s about whether those payments will continue and grow over time. CHCO’s payout ratio of 37.2% suggests it has plenty of room to maintain and even increase its dividend. A payout ratio under 50% is typically seen as healthy, as it allows the company to reinvest in growth while still returning cash to shareholders.
However, dividend growth has been modest in recent years, averaging 2.89% over the past five years. This means CHCO isn’t the kind of stock that will rapidly increase its dividend every year, but it also doesn’t carry the risk of an unsustainable payout.
Another positive factor is the company’s low beta of 0.47, which indicates that its stock price tends to be less volatile than the broader market. For dividend investors looking for stability, that’s an added benefit.
Chart Analysis
Moving Averages Show a Shift in Trend
The chart for CHCO displays both the 50-day (orange) and 200-day (blue) simple moving averages, giving us insight into the stock’s trend. For most of the past year, the stock has traded above both moving averages, indicating an overall bullish phase. However, in recent weeks, the 50-day moving average has turned downward and crossed below the 200-day moving average, a signal that often suggests a loss of momentum.
This shift indicates that the stock, after a strong rally in the latter half of last year, is now experiencing some weakness. With the current price sitting near the 200-day moving average, this level could act as an important support zone. If the stock stays above it, it might stabilize, but if it falls below, it could suggest a deeper pullback.
Price Action and Recent Candlesticks
Looking at recent candlestick patterns, the last five trading days have shown small-bodied candles with long wicks, suggesting indecision in the market. There appears to be buying interest when the stock dips, but there’s also selling pressure at higher levels.
The highs around 130 in late 2024 have given way to lower highs, indicating that momentum has slowed. The recent dip below the 50-day moving average also points to a cautious tone among traders.
Volume Insights
Volume activity is another important factor to consider. The trading volume has been relatively steady, with occasional spikes, most notably in late October and early December. These higher-volume days suggest moments where either large institutional trades were made or key news events influenced the stock.
Recently, the volume has been moderate, aligning with the sideways movement in price. The lack of a significant volume surge suggests that there hasn’t been a strong conviction from buyers or sellers, reinforcing the idea that the stock is in a decision-making phase.
Relative Strength Index (RSI)
The RSI indicator at the bottom of the chart provides additional context. Earlier in the chart, RSI peaked above 70, signaling overbought conditions, which coincided with the stock’s high around 130. Since then, the RSI has gradually trended lower, suggesting that bullish momentum has weakened.
Currently, the RSI is hovering around the neutral zone, not yet oversold but far from overbought. This tells us that while the stock has pulled back from its highs, it isn’t necessarily in a bargain-buying zone just yet.
Support and Resistance Levels
There are a few key price levels to watch. The 115 level, where the stock is currently trading, is acting as a potential support area. This aligns with the 200-day moving average, making it an important inflection point.
If CHCO breaks below 115, the next potential support could be near 110, which was a level of consolidation earlier in the year. On the upside, resistance appears near 120, where the stock previously struggled to stay above after its recent decline.
Analyst Ratings
📊 Upgrades:
📈 In January 2025, CHCO received an upward price target adjustment to $125, reflecting stronger-than-expected earnings. The company posted a fourth-quarter EPS of $1.94, but when adjusting for securities losses, the core EPS was $2.11, surpassing expectations by $0.15 and exceeding broader analyst estimates by $0.19.
💡 The main reason for the upgrade was a lower-than-expected provision for credit losses, which came in at $0.3 million instead of the anticipated $1.3 million. This signals solid credit management and overall financial stability, contributing to the improved outlook.
📊 Downgrades:
⚠️ Despite the strong earnings beat, CHCO remains a “Hold” among many analysts, with concerns over valuation and industry trends impacting sentiment. The average price target sits at $112.25, slightly below current trading levels, signaling a neutral outlook from the broader market.
📉 The downgrade considerations stem from moderating growth expectations within the regional banking sector, where economic uncertainty and interest rate fluctuations could impact future profitability. Some analysts believe the recent run-up in price already reflects much of the positive earnings momentum, leading to a more cautious stance.
📌 Consensus Price Target:
🔍 The latest consensus price target among analysts is mixed, with estimates ranging from $104.67 on the lower end to $125.67 on the higher end. The varied projections highlight differing perspectives on CHCO’s future growth trajectory and valuation.
CHCO’s recent upgrade reflects its solid earnings performance, while the overall analyst sentiment remains balanced, with many choosing to take a wait-and-see approach given the broader economic landscape.
Earnings Report Summary
City Holding Company just released its latest earnings, and the results show steady growth and strong financial health. The regional bank continues to demonstrate resilience, posting solid numbers for both the fourth quarter and full year of 2024.
Fourth Quarter Highlights
The company reported $29.1 million in net income, which translates to earnings per share of $1.96. That’s a slight improvement from the same quarter last year, when net income was $27.45 million with $1.84 per share.
Net interest income ticked up a bit, landing at $55.58 million, up from $54.67 million the previous year. It wasn’t a massive jump, but it reflects stable loan growth and solid interest margins. Meanwhile, non-interest income came in at $16.1 million, an increase from $14.2 million last year, thanks to stronger investment management fees and higher service charges.
Full-Year Performance
Looking at the bigger picture, City Holding had a strong year overall. The bank pulled in $117.1 million in net income, a record high, with annual earnings per share hitting $7.89. That’s up from last year’s numbers of $114.37 million in net income and $7.61 per share.
Net interest income for the full year was $220.24 million, slightly up from the $219.24 million recorded in 2023. It’s a modest gain, but it shows the bank is maintaining stable returns despite fluctuations in interest rates.
Non-interest income also improved, rising to $73.3 million from $70.6 million last year. Most of that increase came from higher fees in investment management and banking services.
Loan Quality and Risk Management
One area to watch is nonperforming assets, which increased slightly to 0.35 percent of total loans ($15.0 million). That’s up from 0.21 percent ($8.6 million) last year, mostly because of one struggling commercial loan tied to a movie theater company.
On the positive side, past-due loans actually declined, falling from $10.9 million to $8.8 million, showing that customers are keeping up with payments better than before. The bank also set aside $1.8 million in credit loss provisions for the year, which is lower than the previous year’s $3.2 million, suggesting confidence in its loan portfolio.
Cash Reserves and Financial Strength
One notable highlight is City Holding’s cash balance of $117 million at year-end. With annual operating expenses of about $45 million, the bank has plenty of liquidity to support future growth or return value to shareholders.
The net interest margin, a key profitability measure for banks, dipped slightly from 3.87 percent to 3.75 percent in the last quarter. While that’s not a dramatic decline, it’s something to monitor if interest rate trends continue shifting.
Overall, City Holding had a strong year, setting records in earnings while maintaining a stable loan portfolio and solid financial position. The bank remains well-capitalized, which should reassure investors looking for steady performance in an uncertain market.
Financial Health and Stability
A company’s ability to pay dividends long-term depends on its financial health, and CHCO remains in strong shape. The bank’s profit margin of 40.14% and operating margin of 49.30% suggest it runs an efficient operation with a solid earnings base.
Some other key financial indicators:
- Return on Equity (ROE): 16.64% → Indicates strong profitability relative to shareholder investment
- Return on Assets (ROA): 1.86% → A solid number for a regional bank
- Net Income (TTM): $116.03M → Stable earnings support continued dividend payments
- Total Cash (MRQ): $282.88M → Provides a strong liquidity cushion
One of CHCO’s strengths is its conservative financial management. While some regional banks have taken on excessive risk, CHCO has maintained a disciplined approach, ensuring it remains resilient even in uncertain economic conditions.
The company does have $526.91M in total debt, but given its earnings power and cash flow, this does not appear to be a major concern. Unlike some larger banks that rely heavily on debt-fueled expansion, CHCO operates with a more measured strategy.
Valuation and Stock Performance
At a trailing price-to-earnings (P/E) ratio of 14.66, CHCO is trading at a reasonable valuation for a dividend-paying bank stock. The forward P/E of 16.42 suggests that earnings may moderate slightly, but it’s still within a normal range for a stable bank.
The stock’s price-to-book ratio of 2.32 is somewhat elevated compared to other regional banks, indicating that investors are willing to pay a premium for CHCO’s financial stability. Its price-to-sales ratio of 5.96 also suggests that it is not trading at a deep discount, but rather at a fair price based on its revenue generation.
Over the past year, CHCO has traded between $97.50 and $137.28, with a current price of $115.68. Its 50-day moving average of $118.58 is slightly higher than its current price, suggesting the stock has seen some short-term weakness. However, its 200-day moving average of $116.91 indicates that it is relatively stable in the long run.
For long-term dividend investors, valuation matters, but it’s just as important to consider the reliability of the dividend rather than short-term stock price fluctuations.
Risks and Considerations
While CHCO is a solid dividend stock, there are always risks to keep in mind.
- Interest Rate Environment – As a regional bank, CHCO’s profitability is closely tied to net interest margin. If interest rates fall significantly, it could put pressure on earnings, making dividend growth more challenging.
- Economic Cycles – While CHCO has a history of navigating economic downturns well, a major slowdown could impact loan growth and credit quality.
- Valuation Premium – The stock is not trading at a bargain price, so investors looking for deep value might find other banks more attractive from a pricing perspective.
- Dividend Growth is Slow – While the dividend is safe, it is not growing at a particularly fast rate. Investors looking for higher dividend increases year over year might want to explore other options.
- Lower Trading Volume – With an average daily volume of around 59.5K shares, CHCO is a lightly traded stock. This means that on some days, price movements could be more pronounced due to lower liquidity.
Final Thoughts
City Holding Company is the kind of stock that doesn’t make headlines, but quietly rewards patient investors. It offers a stable dividend, a strong financial foundation, and low volatility, making it an attractive choice for those who prioritize consistency over speculation.
The bank’s conservative approach has allowed it to maintain steady dividends, even in challenging economic conditions. While dividend growth is on the slower side, the low payout ratio and disciplined financial management suggest that CHCO will remain a reliable dividend payer for years to come.
For investors seeking a safe, income-generating stock with limited downside risk, CHCO is worth considering. It may not be the most exciting stock in the market, but for those who value dependable dividends, it remains a strong choice.
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