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It looks like JPMorgan Chase & Co. (NYSE:JPM) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, JPMorgan Chase investors that purchase the stock on or after the 5th of April will not receive the dividend, which will be paid on the 30th of April.
The company's next dividend payment will be US$1.00 per share, on the back of last year when the company paid a total of US$4.00 to shareholders. Based on the last year's worth of payments, JPMorgan Chase has a trailing yield of 3.1% on the current stock price of $128.75. If you buy this business for its dividend, you should have an idea of whether JPMorgan Chase's dividend is reliable and sustainable. So we need to investigate whether JPMorgan Chase can afford its dividend, and if the dividend could grow.
See our latest analysis for JPMorgan Chase
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately JPMorgan Chase's payout ratio is modest, at just 33% of profit.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see JPMorgan Chase's earnings per share have risen 14% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. JPMorgan Chase has delivered 13% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.