Jiangsu Zijin Rural Commercial Bank Co.,Ltd (SHSE:601860) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Readers hoping to buy Jiangsu Zijin Rural Commercial Bank Co.,Ltd (SHSE:601860) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Jiangsu Zijin Rural Commercial BankLtd's shares on or after the 22nd of January, you won't be eligible to receive the dividend, when it is paid on the 22nd of January.

The company's next dividend payment will be CN¥0.05 per share, and in the last 12 months, the company paid a total of CN¥0.10 per share. Calculating the last year's worth of payments shows that Jiangsu Zijin Rural Commercial BankLtd has a trailing yield of 3.6% on the current share price of CN¥2.77. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Jiangsu Zijin Rural Commercial BankLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Jiangsu Zijin Rural Commercial BankLtd is paying out just 23% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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 how much of its profit Jiangsu Zijin Rural Commercial BankLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Jiangsu Zijin Rural Commercial BankLtd earnings per share are up 3.1% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Jiangsu Zijin Rural Commercial BankLtd's dividend payments are effectively flat on where they were six years ago.

To Sum It Up

Has Jiangsu Zijin Rural Commercial BankLtd got what it takes to maintain its dividend payments? Jiangsu Zijin Rural Commercial BankLtd has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Jiangsu Zijin Rural Commercial BankLtd appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Want to learn more about Jiangsu Zijin Rural Commercial BankLtd? Here's a visualisation of its historical rate of revenue and earnings growth.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.