Here's What We Like About Jammu and Kashmir Bank's (NSE:J&KBANK) Upcoming Dividend

Explore Jammu and Kashmir Bank's Fair Values from the Community and select yours

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The Jammu and Kashmir Bank Limited (NSE:J&KBANK) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Jammu and Kashmir Bank investors that purchase the stock on or after the 19th of August will not receive the dividend, which will be paid on the 25th of September.

The company's next dividend payment will be ₹2.15 per share. Last year, in total, the company distributed ₹2.15 to shareholders. Calculating the last year's worth of payments shows that Jammu and Kashmir Bank has a trailing yield of 2.1% on the current share price of ₹104.03. If you buy this business for its dividend, you should have an idea of whether Jammu and Kashmir Bank's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Jammu and Kashmir Bank is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

View our latest analysis for Jammu and Kashmir Bank

Click here to see how much of its profit Jammu and Kashmir Bank paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Jammu and Kashmir Bank has grown its earnings rapidly, up 41% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Jammu and Kashmir Bank's dividend payments are broadly unchanged compared to where they were 10 years ago.

Final Takeaway

Has Jammu and Kashmir 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. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Jammu and Kashmir Bank ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Jammu and Kashmir Bank looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 2 warning signs for Jammu and Kashmir Bank (of which 1 is a bit concerning!) you should know about.

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.