Chongqing Rural Commercial Bank Co., Ltd. (HKG:3618) stock is about to trade ex-dividend in 4 days time. You can purchase shares before the 27th of May in order to receive the dividend, which the company will pay on the 13th of July.
Chongqing Rural Commercial Bank's next dividend payment will be HK$0.23 per share. Last year, in total, the company distributed HK$0.23 to shareholders. Calculating the last year's worth of payments shows that Chongqing Rural Commercial Bank has a trailing yield of 7.8% on the current share price of HK$3.2. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Chongqing Rural Commercial Bank has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Chongqing Rural Commercial Bank's payout ratio is modest, at just 26% of profit.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Chongqing Rural Commercial Bank earnings per share are up 4.1% per annum over the last five years.
We'd also point out that Chongqing Rural Commercial Bank issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Chongqing Rural Commercial Bank has delivered an average of 6.4% per year annual increase in its dividend, based on the past eight years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Has Chongqing Rural Commercial Bank got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Chongqing Rural Commercial Bank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
On that note, you'll want to research what risks Chongqing Rural Commercial Bank is facing. In terms of investment risks, we've identified 2 warning signs with Chongqing Rural Commercial Bank and understanding them should be part of your investment process.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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. Thank you for reading.