Jiangsu Zhangjiagang Rural Commercial Bank (SZSE:002839) Has Announced A Dividend Of CN¥0.20

Jiangsu Zhangjiagang Rural Commercial Bank Co., Ltd (SZSE:002839) has announced that it will pay a dividend of CN¥0.20 per share on the 6th of June. Based on this payment, the dividend yield will be 4.6%, which is fairly typical for the industry.

View our latest analysis for Jiangsu Zhangjiagang Rural Commercial Bank

Jiangsu Zhangjiagang Rural Commercial Bank's Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Jiangsu Zhangjiagang Rural Commercial Bank has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 25%shows that Jiangsu Zhangjiagang Rural Commercial Bank would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 25.3%. If the dividend continues along recent trends, we estimate the future payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

Jiangsu Zhangjiagang Rural Commercial Bank Doesn't Have A Long Payment History

It is great to see that Jiangsu Zhangjiagang Rural Commercial Bank has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the dividend has gone from CN¥0.0833 total annually to CN¥0.20. This means that it has been growing its distributions at 13% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Jiangsu Zhangjiagang Rural Commercial Bank has grown earnings per share at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Jiangsu Zhangjiagang Rural Commercial Bank's prospects of growing its dividend payments in the future.

Jiangsu Zhangjiagang Rural Commercial Bank Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Jiangsu Zhangjiagang Rural Commercial Bank might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Jiangsu Zhangjiagang Rural Commercial Bank that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.