There are certain banks everyone recognizes: Citi, J.P. Morgan, Wells Fargo, Goldman Sachs, etc… But one little-known company beats the pants off all of them.
Hingham Institution for Savings is the stock we’re looking at.
This is a bank that focuses on commercial and residential real estate lending, as well as commercial and personal deposit banking.
This might not sound very exciting and Hingham’s business may sound incredibly simple. But the company excels at the three areas they focus on, turning this stock into a mega-compounder. In fact, share prices are up almost 93% in the past year.
But, here’s the thing. While share prices are up, the company retains a fairly low PE ratio. The current PE ratio is around 14, which means each share bought contains around $30 of company value.
This is very different from many high-priced stocks, like Amazon or Tesla, which often have triple or quadruple digit PE ratios.
In other words, this stock is “expensive” because it has a lower share count compared to its market cap. Not because it is a hype stock. One of the reasons I just used “expensive” in quotation marks is actually because Hingham Institution for Savings trades at a PE ratio in-line with the general banking sector.
So while Hingham stock has a high share price of more than $400, you aren’t necessarily overpaying for the business.
Hingham Institution For Savings Is A Dividend Compounder, Offering Cash Flow And Growth
At first glance, Hingham pays a minuscule dividend with a starting yield of 0.51%. That’s tiny! A $1 million investment would only net you $5,100 per year in passive income. Far less than you’d make off a broad market index fund.
However looks can be deceiving. Hingham has a very small dividend payout ratio of under 7%, meaning that the company retains most of its earnings.