The board of JPMorgan Chase & Co. (NYSE:JPM) has announced that it will pay a dividend on the 31st of January, with investors receiving $1.25 per share. Although the dividend is now higher, the yield is only 2.1%, which is below the industry average.
Check out our latest analysis for JPMorgan Chase
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
JPMorgan Chase has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on JPMorgan Chase’s last earnings report, the payout ratio is at a decent 26%, 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 6.6%. Analysts forecast the future payout ratio could be 29% over the same time horizon, which is a number we think the company can maintain.
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $1.52 in 2014, and the most recent fiscal year payment was $5.00. This means that it has been growing its distributions at 13% per annum over that time. 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 company’s investors will be pleased to have been receiving dividend income for some time. JPMorgan Chase has seen EPS rising for the last five years, at 13% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for JPMorgan Chase’s prospects of growing its dividend payments in the future.
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 JPMorgan Chase that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
