Parke Bancorp (NASDAQ:PKBK) Is Due To Pay A Dividend Of US$0.16

Parke Bancorp, Inc. (NASDAQ:PKBK) has announced that it will pay a dividend of US$0.16 per share on the 20th of July. The dividend yield will be 3.2% based on this payment which is still above the industry average.

Check out our latest analysis for Parke Bancorp

Parke Bancorp's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Parke Bancorp's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 19.3% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.

Parke Bancorp Doesn't Have A Long Payment History

It is great to see that Parke Bancorp 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. The dividend has gone from US$0.14 in 2014 to the most recent annual payment of US$0.64. This works out to be a compound annual growth rate (CAGR) of approximately 25% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

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. Parke Bancorp has impressed us by growing EPS at 19% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Parke Bancorp's prospects of growing its dividend payments in the future.

We Really Like Parke Bancorp's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Parke Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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