Readers hoping to buy Jiangsu Zhangjiagang Rural Commercial Bank Co., Ltd (SZSE:002839) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Jiangsu Zhangjiagang Rural Commercial Bank's shares before the 1st of June in order to receive the dividend, which the company will pay on the 1st of June.
The company's next dividend payment will be CN¥0.20 per share, on the back of last year when the company paid a total of CN¥0.20 to shareholders. Based on the last year's worth of payments, Jiangsu Zhangjiagang Rural Commercial Bank has a trailing yield of 4.5% on the current stock price of CN¥4.48. If you buy this business for its dividend, you should have an idea of whether Jiangsu Zhangjiagang Rural Commercial Bank's dividend is reliable and sustainable. So we need to investigate whether Jiangsu Zhangjiagang Rural Commercial Bank can afford its dividend, and if the dividend could grow.
See our latest analysis for Jiangsu Zhangjiagang Rural Commercial Bank
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Jiangsu Zhangjiagang Rural Commercial Bank paying out a modest 26% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Jiangsu Zhangjiagang Rural Commercial Bank's earnings per share have risen 17% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, six years ago, Jiangsu Zhangjiagang Rural Commercial Bank has lifted its dividend by approximately 16% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Has Jiangsu Zhangjiagang Rural Commercial Bank got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Jiangsu Zhangjiagang Rural Commercial Bank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
While it's tempting to invest in Jiangsu Zhangjiagang Rural Commercial Bank for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for Jiangsu Zhangjiagang Rural Commercial Bank that you should be aware of before investing in their shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.