Analyzing the Potential Dividend Run for First Hawaiian Inc
This morning, a “Potential Dividend Run Alert” was issued for First Hawaiian Inc (NASD: FHB) via our DividendChannel.com service. Let’s delve into the details surrounding this situation.
Understanding the “Dividend Run” Concept
Before examining FHB’s potential rise, it’s important to clarify what a “Dividend Run” entails. This concept, which we first encountered at a ValueForum conference, focuses on behaviors observed around a stock’s ex-dividend date.
The ex-dividend date is the trading day when buyers of the stock are no longer eligible for the upcoming dividend. To qualify, investors must purchase shares before this date. Typically, the stock price is expected to drop by the dividend amount on the ex-dividend date. This decline occurs because if the shares didn’t drop accordingly, buyers would effectively pay more for the same stock without receiving the dividend.
The Anticipated Price Movement Before Ex-Dividend Date
Now, let’s consider an intriguing question: if a stock is expected to drop by the dividend amount on the ex-date, shouldn’t it rise before the dividend is paid? If stocks consistently dropped without rising beforehand, their prices would eventually hit zero. This scenario contradicts the idea of companies that consistently earn profits and declare dividends. Therefore, there tends to be a “pressure” for stocks to climb in anticipation of the upcoming dividend, leading to what we call a potential Dividend Run.
Different investors have varied strategies regarding the timing of these Dividend Runs. Some prefer to buy and sell on specific dates, while others utilize dollar-cost averaging. Some may buy shares shortly before the ex-dividend date, hold them until they receive the dividend, and sell afterwards. Conversely, other investors may sell the day before the ex-date to maximize their capital gains. Generally, a common timeframe discussed by investors is purchasing about two weeks (or ten trading days) prior to the intended sale date.
Case Study: FHB’s Recent Dividend History
For example, consider FHB’s dividend of $0.26 per share that became ex-dividend on 02/14/25. The trading day before this date, shares closed at $27.40. Two weeks prior, on 01/30/25, shares were valued at $26.79. This indicates a price increase of $0.61 in the two weeks leading up to the dividend payment.
Reviewing FHB’s last four dividends, this approach would have yielded capital gains greater than the dividend amount three times out of four, with a total gain of $3.41. In contrast, the cumulative sum of those dividends was $1.04. The data is outlined below:
| Ex-Dividend | ——Price 2 Weeks Prior—» | ——Price 1 Day Prior—» | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 02/14/25 | 0.26 | 01/30/25 | 26.79 | 02/13/25 | 27.40 | +0.61 |
| 11/18/24 | 0.26 | 11/01/24 | 24.82 | 11/15/24 | 27.20 | +2.38 |
| 08/19/24 | 0.26 | 08/02/24 | 23.46 | 08/16/24 | 23.56 | +0.10 |
| 05/17/24 | 0.26 | 05/02/24 | 21.69 | 05/16/24 | 22.01 | +0.32 |
| Div Total: | 1.04 | “Divvy Run” Total: | +3.41 | |||
Upcoming Dividend Information
In about two weeks, First Hawaiian Inc (NASD: FHB) will go ex-dividend for its latest dividend of $0.26 per share. Will this pattern of Dividend Run continue?
Upcoming Dividend: 0.26/share
Ex-Div Date: 05/19/25
Payment Date: 05/30/25
Dividend Frequency: Quarterly
Full FHB Dividend History »
Final Thoughts
While past performance is not an assurance of future results, those investors leveraging Dividend Runs in their strategies may find FHB a noteworthy stock, especially with its annualized yield of 4.47%.
Stay informed about future Dividend Run candidates as developments arise.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
