Introduction: Dividend Growth Amidst Financial Complexity#
Equitable Holdings, Inc. (EQH recently raised its common stock dividend by 12.5% to an annualized $1.08 per share, signaling confidence in its cash flow stability despite notable balance sheet challenges. This dividend increase, effective from June 2025, follows improved non-GAAP operating earnings and a strategic pivot toward capital-light operations. However, the company’s financial landscape is nuanced by significant unrealized losses and a high leverage profile, posing questions about the sustainability of its payouts.
Professional Market Analysis Platform
Unlock institutional-grade data with a free Monexa workspace. Upgrade whenever you need the full AI and DCF toolkit—your 7-day Pro trial starts after checkout.
The dividend hike represents a strategic milestone for EQH, which is concurrently navigating balance sheet pressures and advancing transformative transactions aimed at enhancing earnings quality and capital efficiency. This analysis delves into the recent dividend decisions, the underlying financial metrics, strategic asset management moves, and their implications for investors assessing the company's fundamental strength.
Equitable Holdings' Dividend Policy: Recent Hikes and Yield Context#
In May 2025, Equitable Holdings announced a 12.5% increase in its quarterly dividend to $0.27 per share, translating into an annualized dividend of $1.08. The ex-dividend date was set for June 2, 2025. This adjustment aligns with the company’s target payout ratio range of 60-70% based on Q1 2025 non-GAAP operating earnings of $421 million, indicating disciplined capital allocation that supports shareholder returns while maintaining operational flexibility.
Monexa for Analysts
Go deeper on EQH
Open the EQH command center with real-time data, filings, and AI analysis. Upgrade inside Monexa to trigger your 7-day Pro trial whenever you’re ready.
The common dividend yield stands at approximately 1.81%, modest when compared to the Financial Services sector average of 3.06%. Over the past five years, EQH’s dividend yield averaged around 2.5%, suggesting a slight contraction relative to historical levels. This conservative yield positioning reflects the company's strategic focus on balancing dividend growth with financial stability amid a complex macroeconomic environment.
Complementing the common shares, Equitable’s preferred securities offer elevated yields that exceed their original coupon rates due to market price discounts influenced by rising interest rates. Although these preferred shares carry credit risk—highlighted by an S&P rating of BBB- with a negative outlook—they present attractive income opportunities for risk-tolerant investors.
Financial Health and Balance Sheet Analysis: Leverage and Unrealized Losses#
Despite the dividend increase, Equitable Holdings faces significant balance sheet vulnerabilities. As of early 2025, the company reported approximately $8.074 billion in net unrealized losses on fixed income securities, primarily due to rising interest rates that have devalued fixed maturity investments. These unrealized losses represent a critical risk factor affecting the company’s capital resilience and dividend sustainability.
Leverage metrics reflect elevated risk: GuruFocus reports a debt-to-equity ratio of 3.75 as of December 2024, while Simply Wall St notes an even higher figure of 146.6%, revealing discrepancies likely due to differing calculation methodologies. More concretely, the company's reported leverage ratio stands at an extreme 37.6:1, underscoring a substantial debt burden relative to equity. This high leverage, coupled with unrealized losses, raises concerns about financial flexibility in adverse market conditions.
The balance sheet snapshot shows total liabilities nearing $292.3 billion against stockholders’ equity of just $1.58 billion at the end of 2024, further emphasizing the capital structure's sensitivity. However, the company maintains a net cash position with net debt of -$1.01 billion, reflecting significant cash and short-term investments totaling $83.61 billion, which somewhat mitigates liquidity risk.
Strategic Asset Management and Earnings Quality Enhancements#
Equitable Holdings is actively transforming its business model towards capital-light operations focused on recurring revenue streams. A key transaction was the increase of its stake in asset manager AllianceBernstein to 69% via a $760 million unit purchase, positioning the company to benefit from more predictable fee-based earnings.
Additionally, the ongoing sale of approximately 75% of its Protection business to Reinsurance Group of America (RGA) is expected to close by mid-2025, unlocking an estimated $2 billion in capital benefits. This divestiture reduces risk exposure and strengthens capital availability, supporting dividend sustainability and strategic investments.
The company also executed a $700 million forward-flow deal with Octane, involving New York Life and MetLife Investment Management, enhancing capital flexibility and underwriting capacity. These strategic deals, combined with a $261 million share buyback in Q1 2025 that reduced share count by 7% year-over-year, demonstrate a concerted effort to optimize capital allocation and improve shareholder returns.
Market Reaction and Valuation Metrics#
EQH’s current stock price is approximately $56.10, with a modest intraday gain of +0.25%. The price-to-earnings (P/E) ratio stands at 15.12x, slightly above the trailing twelve months (TTM) P/E of 13.75x, indicating moderate valuation expansion. Forward P/E estimates project a declining trend from 14.23x in 2024 to 4.86x by 2028, reflecting analyst expectations of accelerating earnings growth.
The company’s price-to-book ratio is elevated at 7.19x, consistent with high leverage and asset-light operational focus. Enterprise value to EBITDA (EV/EBITDA) stands at 5.32x, suggesting a reasonable valuation relative to earnings before interest, taxes, depreciation, and amortization.
Financial Performance Snapshot (Fiscal Year Ending December 31, 2024)#
| Metric | Value | Year-over-Year Change | Commentary |
|---|---|---|---|
| Revenue | $12.44 billion | +18.13% | Strong top-line growth |
| Operating Income | $2.34 billion | +216% approx. | Significant operational leverage |
| Net Income | $1.31 billion | +0.38% | Stable but modest net income growth |
| EPS (Earnings Per Share) | $3.71 | +8.62% | EPS growth aligns with net income |
| Dividend per Share (Annual) | $0.99 | 0% | Stable dividend prior to recent hike |
Balance Sheet Highlights (As of December 31, 2024)#
| Metric | Value | Notes |
|---|---|---|
| Total Assets | $295.87 billion | Asset base growth |
| Total Liabilities | $292.3 billion | High leverage environment |
| Total Stockholders’ Equity | $1.58 billion | Low relative equity |
| Cash & Short-Term Invest. | $83.61 billion | Strong liquidity position |
| Long-Term Debt | $3.83 billion | Manageable debt level |
What Does This Mean For Investors?#
Investors evaluating Equitable Holdings must balance the company’s recent dividend growth and strategic capital-light transformation against its significant balance sheet risks. The 12.5% dividend increase is underpinned by improving operating earnings and a disciplined payout ratio but is tempered by a highly leveraged capital structure and large unrealized losses in fixed income assets.
Strategic transactions, including the RGA Protection business sale and enhanced AllianceBernstein stake, aim to improve earnings quality and capital efficiency, potentially supporting sustainable dividend growth and valuation multiple expansion. However, the elevated leverage ratios and credit rating pressures on preferred shares warrant cautious monitoring.
From a valuation perspective, the stock’s moderate P/E and EV/EBITDA multiples suggest reasonable market expectations, with forward earnings growth anticipated to accelerate through 2028. The company’s liquidity position, bolstered by substantial cash reserves, provides some cushion against balance sheet stress.
Key Takeaways for Investors:#
- Dividend Increase: 12.5% hike to $1.08 annualized dividend, reflecting stronger cash flows.
- Balance Sheet Risk: Significant unrealized fixed income losses (~$8 billion) and very high leverage (debt-to-equity ~37.6:1).
- Strategic Transactions: Sale of 75% Protection business to RGA and increased AllianceBernstein stake enhance capital-light earnings.
- Preferred Shares: Attractive yields amid credit risks; BBB- rating with negative outlook.
- Valuation Outlook: Forward P/E expected to decline, signaling earnings growth optimism.
- Liquidity: Strong cash and short-term investments ($83.61 billion) mitigate short-term financial risks.
Investors should continue to monitor upcoming earnings announcements, including the next report scheduled for July 28, 2025, and assess how ongoing strategic initiatives impact the company’s capital structure and dividend sustainability.