Updated 3/10/25
Hilltop Holdings Inc. (HTH) is a financial holding company that operates in banking, mortgage origination, and insurance. With a market cap of around $2.05 billion, it’s a stable player in the financial services space. The company has built a solid reputation for consistent performance, making it an interesting option for dividend investors.
While it’s not a high-yield stock, Hilltop offers a sustainable dividend with room for growth. For income-focused investors, this balance between stability and earnings potential is worth a closer look. Let’s dive into the key dividend metrics and see how Hilltop stacks up as a dividend investment.
Key Dividend Metrics
🔹 Dividend Yield: 2.27% (forward), 2.15% (trailing)
🔹 Annual Dividend Per Share: $0.72 (forward), $0.68 (trailing)
🔹 5-Year Average Yield: 1.82%
🔹 Payout Ratio: 39.08%
🔹 Ex-Dividend Date: February 13, 2025
🔹 Dividend Date: February 27, 2025
Dividend Overview
Hilltop’s dividend yield sits at 2.27%, which isn’t sky-high but remains respectable for a financial stock. What stands out is its commitment to dividend payments. The payout ratio of 39.08% suggests a cautious, well-managed approach to returning cash to shareholders while keeping plenty of earnings for business growth.
Unlike some financial stocks with volatile dividend policies, Hilltop has maintained consistency. The five-year average dividend yield of 1.82% also suggests slow but steady improvements in payouts. While this stock may not be a pure income play, it offers reliability—something long-term investors appreciate.
Dividend Growth and Safety
Dividend safety is always a priority, and Hilltop appears to be in good shape. The 39.08% payout ratio means the company is only paying out a portion of its earnings as dividends, leaving room for reinvestment and financial flexibility.
The company’s earnings growth is another strong point. Quarterly earnings have grown 23.90% year-over-year, showing that the business is expanding at a healthy pace. Growth like this supports continued dividend payments and possibly higher future payouts.
That said, one factor to watch is debt. Hilltop carries $2.6 billion in total debt. While manageable, it’s something to keep an eye on because excessive debt can eventually impact cash flow and dividend stability.
Chart Analysis
Moving Averages and Trend
The stock is trading just above the 50-day simple moving average (SMA), which suggests short-term momentum is slightly positive. However, the 200-day SMA is still trending downward, meaning the longer-term trend is not fully bullish yet. The recent move back above the 50-day average could indicate early signs of a recovery, but it remains to be seen if it can sustain the upward momentum.
Looking at the past few months, the stock experienced a steep drop in December, followed by a strong rebound in January and February. The price action since then has been choppy, moving sideways with slight upward pressure.
Volume and Buying Interest
Trading volume has been relatively steady, with some occasional spikes that coincide with price swings. A few notable volume surges in October and late January suggest that institutional buyers or large traders may have stepped in at those points. However, the recent volume is neither high nor extremely low, meaning there isn’t a significant imbalance between buyers and sellers at the moment.
Lower volume near key moving averages can sometimes indicate hesitation among traders, while an increase in volume near resistance levels would suggest stronger conviction. For now, the volume doesn’t signal any major accumulation or distribution.
Relative Strength Index (RSI)
The RSI is hovering in a neutral range, neither overbought nor oversold. This suggests that the stock isn’t at an extreme valuation level in either direction. The RSI was previously lower during the December drop, indicating a potential oversold condition at that time, which aligns with the strong bounce seen afterward.
More recently, the RSI has been holding in a mid-range level, implying that the stock isn’t under heavy selling pressure, but it also isn’t showing strong bullish momentum. If RSI starts moving above 70, it could signal that the stock is approaching an overbought zone, whereas a dip below 30 would indicate oversold conditions.
Price Action and Support/Resistance
The stock is currently trading near a resistance area that has acted as a ceiling several times in the past. It struggled to hold above this level in late February, suggesting some hesitation among buyers. If it breaks decisively above the current price range with increased volume, it could signal a more sustained move higher.
On the downside, there is some clear support near the $30 level, where the stock found buyers after its December decline. If the stock moves back toward this level, it will be important to see whether it holds or breaks lower. A break below $30 with strong volume could open the door for further downside movement.
Recent Candlestick Patterns
The last five candlesticks show a mix of indecision and slight upward bias. The presence of longer wicks on some of the recent candles suggests that sellers have been active at higher prices, but buyers have also stepped in on dips. This type of price action often indicates consolidation before the next major move.
The most recent daily close was slightly higher than the opening price, showing some buying strength. However, without a strong push past resistance, the stock may continue trading within this range until a catalyst shifts the trend.
Analyst Ratings
Hilltop Holdings Inc. (HTH) has recently seen a mix of analyst opinions, reflecting both optimism and caution. The consensus price target among analysts is $34.00, with individual forecasts ranging from $32.00 on the low end to $35.00 on the high end.
🔼 Upgrades
📈 Recent analyst upgrades have pointed to improving fundamentals and stronger earnings potential. Some firms have highlighted Hilltop’s diversified revenue streams and its ability to navigate a shifting financial landscape.
🔹 In a past revision, Stephens upgraded the stock from “Equal-Weight” to “Overweight,” signaling growing confidence in the company’s outlook.
🔹 Raymond James previously adjusted its stance from “Market Perform” to “Outperform,” citing positive revenue trends and an improving economic backdrop.
These upgrades were based on expectations of stronger earnings growth, solid loan portfolio performance, and improving market conditions for financial stocks.
🔻 Downgrades
⚠️ Despite some positive sentiment, other analysts have taken a more cautious approach. Concerns about the company’s reliance on fee-based revenue and interest rate sensitivity have led to recent downgrades.
🔸 On December 19, 2024, Raymond James shifted its rating from “Market Perform” to “Underperform.” Analysts noted that approximately 65% of Hilltop’s third-quarter 2024 revenue came from fees, which may come under pressure in a prolonged high-interest rate environment.
🔸 More recently, on February 3, 2025, Keefe, Bruyette & Woods adjusted their price target from $35.00 to $34.00 and assigned a “Market Perform” rating. This cautious stance reflects concerns about near-term earnings volatility and the challenges facing the mortgage and securities businesses.
These mixed ratings show that while some analysts see potential for upside, others are wary of headwinds that could impact earnings growth.
Earnings Report Summary
Hilltop Holdings Inc. recently released its latest earnings report, and the numbers tell an interesting story about where the company stands as it moves into 2025. While there were some challenges, Hilltop managed to deliver solid results with steady growth in key areas.
Fourth Quarter Performance
The company wrapped up the fourth quarter with $35.5 million in net income, which works out to $0.55 per diluted share. That’s an improvement from last year’s $28.7 million, or $0.44 per share, showing some positive momentum. Revenue also climbed to $301.2 million, up from $284.5 million in the same period last year.
One of the key profitability metrics, return on average assets, came in at 0.9 percent, while return on average equity landed at 6.5 percent. These figures suggest that the company is putting its resources to good use, though there’s still room to improve efficiency.
Full-Year Results
For the full year, Hilltop reported $123.2 million in net income, or $1.74 per share, slightly ahead of the $118.0 million (or $1.69 per share) it posted in 2023. Revenue growth was steady, but net interest income took a bit of a hit, dropping from $466.8 million last year to $417.8 million. Rising deposit costs and a decline in loan balances played a role in that dip.
On the bright side, noninterest income—which includes things like brokerage and investment banking services—grew from $729.0 million to $771.0 million, thanks to strong performances in structured finance and public finance. The company’s ability to diversify revenue sources helped offset some of the challenges in traditional banking.
How Different Segments Performed
- Banking: This division brought in $181.9 million in pre-tax income, down from $199.0 million last year. Lower interest income and higher costs put some pressure on the segment.
- Broker-Dealer: Hilltop’s investment banking and brokerage services contributed $63.5 million in pre-tax income, a decline from $73.5 million in 2023. Higher compensation and operational costs ate into earnings despite stronger revenue.
- Mortgage Origination: While still operating at a loss, the mortgage segment showed improvement. It posted a $33.7 million loss, which was a step up from the $62.8 million loss reported in 2023. Lower expenses and a small uptick in loan origination helped reduce the deficit.
Capital Moves
Hilltop took a few strategic steps to strengthen its financial position. It redeemed all outstanding 5 percent senior notes due in 2025, using cash reserves to eliminate the debt. The company also authorized a new $100 million stock buyback program, giving it flexibility to return value to shareholders.
On the dividend front, Hilltop announced a quarterly payout of $0.18 per share, set to be distributed on February 27, 2025.
While the year had its share of ups and downs, Hilltop Holdings continues to navigate the financial landscape with a mix of caution and opportunity, keeping investors engaged as it heads into the next phase of growth.
Financial Health and Stability
Hilltop has a strong liquidity position, with $890.27 million in total cash, translating to $13.73 per share. That’s a solid financial cushion, especially in an unpredictable economic environment.
Profitability metrics show the company is generating steady returns, but there’s room for improvement. The return on equity (ROE) of 5.64% and return on assets (ROA) of 0.75% suggest that while the business is profitable, it’s not among the most efficient financial institutions. Stronger players in the industry often post ROE figures above 10%.
On the revenue side, things are moving in the right direction. Quarterly revenue growth came in at 6.20% year-over-year, showing that the business is expanding. Profit margins are also decent, with a 9.53% net margin and a 14.39% operating margin. These numbers indicate the company is running a solid operation, though some peers may have stronger margins.
One key metric that might catch a value investor’s attention is the book value per share, which stands at $33.71. Since the stock is trading around $30.66, it suggests that Hilltop may be undervalued relative to its assets.
Valuation and Stock Performance
At a price-to-earnings (P/E) ratio of 18.20, Hilltop isn’t overvalued, but it’s also not trading at bargain levels. The price-to-book (P/B) ratio of 0.94, however, hints that the stock is trading below its book value, which could signal a buying opportunity for long-term investors.
Looking at its stock price movement, Hilltop has traded between a 52-week high of $35.32 and a low of $26.67. With the current price sitting at $30.66, it’s in the middle of that range. Recent trading has been a bit choppy, with the stock dipping 3.19% in the last session.
From a technical perspective, the stock is near its 50-day moving average of $30.14 but still below the 200-day moving average of $31.17. That suggests some recent downward pressure, though the stock hasn’t moved dramatically in one direction. Institutional investors still hold 58.80% of the shares, which signals confidence in the long-term outlook.
Risks and Considerations
No stock is without risks, and Hilltop has a few factors that investors should consider:
- Interest rate fluctuations can impact profitability since the company operates in the financial sector. Lower rates tend to squeeze margins.
- The $2.6 billion in debt is a key figure to watch. While not necessarily a red flag, any increase in leverage could put pressure on cash flow.
- Stock price volatility is another factor. With a beta of 1.14, Hilltop’s shares tend to move slightly more than the broader market, which may not suit ultra-conservative investors.
- While earnings and revenue are growing, any slowdown in these areas could affect dividend growth over time.
Final Thoughts
Hilltop Holdings Inc. offers a steady and reliable dividend but isn’t necessarily a high-yield stock. With a 2.27% yield and a conservative payout ratio of 39.08%, the dividend appears sustainable. The company has a strong financial position, with a sizable cash reserve and stable earnings growth.
Valuation-wise, the stock trades below its book value, which could indicate a good entry point for value-conscious investors. However, risks like interest rate sensitivity and debt levels should be considered.
For investors looking for a well-run financial stock with a reliable dividend, Hilltop is worth keeping on the radar. While it may not be the most exciting dividend play, its combination of stability and financial strength makes it a reasonable choice for long-term income investors.
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