Standard Bank Group (JSE:SBK) Will Pay A Larger Dividend Than Last Year At ZAR8.17

The board of Standard Bank Group Limited (JSE:SBK) has announced that it will be paying its dividend of ZAR8.17 on the 15th of September, an increased payment from last year's comparable dividend. This will take the annual payment to 6.7% of the stock price, which is above what most companies in the industry pay.

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

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Standard Bank Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Standard Bank Group's payout ratio of 56% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 26.7% over the next 3 years. The future payout ratio could be 57% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

View our latest analysis for Standard Bank Group

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was ZAR5.98, compared to the most recent full-year payment of ZAR16.34. This works out to be a compound annual growth rate (CAGR) of approximately 11% 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.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Standard Bank Group has been growing its earnings per share at 23% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Standard Bank Group could prove to be a strong dividend payer.

We Really Like Standard Bank Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. All of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 1 warning sign for Standard Bank Group that you should be aware of before investing. 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.