Standard Bank Group (JSE:SBK) Is Increasing Its Dividend To ZAR7.44

Standard Bank Group Limited (JSE:SBK) will increase its dividend on the 16th of September to ZAR7.44, which is 7.8% higher than last year's payment from the same period of ZAR6.90. This makes the dividend yield 6.1%, which is above the industry average.

Check out our latest analysis for Standard Bank Group

Standard Bank Group's Payment Expected To Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Standard Bank Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Standard Bank Group's last earnings report, the payout ratio is at a decent 56%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 21.1%. Analysts forecast the future payout ratio could be 57% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ZAR5.33 in 2014, and the most recent fiscal year payment was ZAR14.23. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Standard Bank Group Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Standard Bank Group has been growing its earnings per share at 8.6% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Standard Bank Group's Dividend

Overall, a dividend increase is always good, and we think that Standard Bank Group is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For example, we've picked out 1 warning sign for Standard Bank Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of 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.