JPMorgan Chase & Co.’s (NYSE:JPM) periodic dividend will be increasing on the 31st of October to $1.05, with investors receiving 5.0% more than last year’s $1.00. This takes the annual payment to 2.7% of the current stock price, which unfortunately is below what the industry is paying.
View our latest analysis for JPMorgan Chase
JPMorgan Chase’s Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
JPMorgan Chase 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 JPMorgan Chase’s payout ratio of 26% is a good sign as this means that earnings decently cover dividends.
EPS is set to fall by 7.7% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 33% over the same time period, which we think the company can easily maintain.
JPMorgan Chase Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.20 in 2013 to the most recent total annual payment of $4.00. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. JPMorgan Chase has impressed us by growing EPS at 16% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
JPMorgan Chase Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won’t be a problem if this doesn’t become a trend, but could cause some turbulence in the next year. 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. However, there are other things to consider for investors when analysing stock performance. For example, we’ve identified 2 warning signs for JPMorgan Chase (1 is a bit concerning!) that you should be aware of before investing. Is JPMorgan Chase 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.
Source: finance.yahoo.com
