Parke Bancorp (NASDAQ:PKBK) Has Affirmed Its Dividend Of US$0.16

The board of Parke Bancorp, Inc. (NASDAQ:PKBK) has announced that it will pay a dividend of US$0.16 per share on the 19th of July. This payment means that the dividend yield will be 3.1%, which is around the industry average.

See our latest analysis for Parke Bancorp

Parke Bancorp's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, prior to this announcement, Parke Bancorp's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 11.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Parke Bancorp Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 8 years of history we want to see a few more years of history before making any solid conclusions. The first annual payment during the last 8 years was US$0.14 in 2014, and the most recent fiscal year payment was US$0.64. This works out to be a compound annual growth rate (CAGR) of approximately 21% a year over that time. Parke Bancorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Parke Bancorp has seen EPS rising for the last five years, at 12% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Parke Bancorp's prospects of growing its dividend payments in the future.

Parke Bancorp Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Parke Bancorp that investors need to be conscious of moving forward. Is Parke Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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