JD.com's (NASDAQ:JD) Shareholders Will Receive A Bigger Dividend Than Last Year

JD.com, Inc. (NASDAQ:JD) will increase its dividend from last year's comparable payment on the 29th of April to CN¥0.74. This will take the annual payment to 3.1% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for JD.com

JD.com's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, JD.com's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 54.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 3.1%, which is in the range that makes us comfortable with the sustainability of the dividend.

JD.com Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. JD.com has seen EPS rising for the last five years, at 7.7% per annum. JD.com definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On JD.com's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for JD.com that investors should know about before committing capital to this stock. Is JD.com 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.