Because JPMorgan Chase (JPM 1.94%) is already so large -- it's the biggest bank in the country -- it isn't likely to get growth investors very excited. Where JPMorgan Chase shines from an investment perspective is instead when it comes to income investing.
You can see this by looking at how the New York-based bank stacks up to the competition on the three most important dividend-investing metrics.
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1. Dividend yield
When it comes to income investing, the most common metric most investors are familiar with is the dividend yield. This measures the percent of income a company pays out each year via dividends.
The dividend yield is calculated by dividing a bank's dividend per share over the last 12 months by its earnings per share over the same stretch. If you do this in JPMorgan Chase's case, you get a dividend yield of 2.14%.
Data source: YCharts.com. Chart by author.
Compared to the average large-cap stock, this is a pretty standard payout, as the average on the S&P 500 is 2%. However, compared to other big banks, JPMorgan Chase's dividend seems much more generous. To this end, its stock sports the fourth-highest yield among the nation's 20 biggest banks.
2. Dividend growth
Second to yield, the next most important metric for dividend investors to analyze before settling on a stock is the likely growth in its quarterly payout. The faster a company grows its dividend, the better for income investors.
JPM Dividend data by YCharts.
In JPMorgan Chase's case, it isn't growing its dividend as quickly as some of its peers are, but it is nevertheless continuing to boost its per-share payout. Following the latest stress tests, the bank announced a 12% increase in its dividend, from $0.50 per share previously up to $0.56 going forward.
What makes JPMorgan Chase's latest increase particularly impressive is the fact that it was the seventh year in a row that it upped its dividend. This doesn't necessarily mean that it will continue to do so in future years, but it seems fair to assume that it's a habit the bank won't want to break unless it absolutely has to.
3. Dividend payout
The final metric that's worth examining before you buy a dividend stock is the payout ratio. This measures the percent of earnings that a bank pays out to shareholders each year.
As a general rule, most banks strive to distribute a third of their earnings each year via dividends. The two other thirds then tend to be split between buybacks and retained earnings.
In JPMorgan Chase's case, its payout ratio over the last 12 months comes in right at 33%. That's slightly higher than the average among the 20 biggest banks in the country, but it nevertheless leaves JPMorgan Chase plenty of room to continue hiking its payout in the years ahead.
Data source: YCharts.com. Chart by author.
In sum, if you're an investor and are looking for a bank stock to add to your dividend portfolio, you could do a lot worse than JPMorgan Chase. With a higher yield than most other blue-chip bank stocks, combined with a consistent history of growing its per-share payout each year, this is the type of stock that could serve as the centerpiece of an income investor's holdings.
