Punjab National Bank (NSE:PNB) Is Increasing Its Dividend To ₹2.90

Punjab National Bank's (NSE:PNB) dividend will be increasing from last year's payment of the same period to ₹2.90 on 27th of July. This makes the dividend yield 2.8%, which is above the industry average.

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Punjab National Bank's Earnings Will Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Punjab National Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Punjab National Bank's payout ratio sits at 18%, an extremely comfortable number that shows that it can pay its dividend.

Over the next 3 years, EPS is forecast to expand by 0.8%. The future payout ratio could be 21% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for Punjab National Bank

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of ₹3.30 in 2015 to the most recent total annual payment of ₹2.90. Doing the maths, this is a decline of about 1.3% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Punjab National Bank has impressed us by growing EPS at 82% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Punjab National Bank's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Punjab National Bank that you should be aware of before investing. Is Punjab National Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.