Standard Bank Group (JSE:SBK) Has Announced That It Will Be Increasing Its Dividend To ZAR7.33
The board of Standard Bank Group Limited (JSE:SBK) has announced that it will be increasing its dividend by 6.1% on the 15th of April to ZAR7.33, up from last year's comparable payment of ZAR6.91. This makes the dividend yield 7.4%, which is above the industry average.
Check out our latest analysis for Standard Bank Group
Standard Bank Group's Earnings Will Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Standard Bank Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. 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.
The next 3 years are set to see EPS grow by 21.2%. The future payout ratio could be 58% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ZAR4.76 in 2014 to the most recent total annual payment of ZAR13.81. This means that it has been growing its distributions at 11% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
We Could See Standard Bank Group's Dividend Growing
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Standard Bank Group has grown earnings per share at 7.9% per 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.
Our Thoughts On Standard Bank Group's Dividend
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Standard Bank Group that investors should take into consideration. 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.
