Bank of China (HKG:3988) Has Announced A Dividend Of CN¥0.2591

The board of Bank of China Limited (HKG:3988) has announced that it will pay a dividend of CN¥0.2591 per share on the 5th of August. The dividend yield is 6.6% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Bank of China

Bank of China's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Bank of China has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Bank of China's last earnings report, the payout ratio is at a decent 33%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 12.4%. The future payout ratio could be 31% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Bank of China Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was CN¥0.196, compared to the most recent full-year payment of CN¥0.236. This means that it has been growing its distributions at 1.9% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Bank of China May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 4.1% per year. While growth may be thin on the ground, Bank of China could always pay out a higher proportion of earnings to increase shareholder returns.

Bank of China Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 15 analysts we track are forecasting for Bank of China for free with public analyst estimates for the company. 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.

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