Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Just Group plc (LON:JUST) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company’s books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Just Group’s shares on or after the 11th of April will not receive the dividend, which will be paid on the 15th of May.
The company’s upcoming dividend is UK£0.015 a share, following on from the last 12 months, when the company distributed a total of UK£0.021 per share to shareholders. Based on the last year’s worth of payments, Just Group has a trailing yield of 1.9% on the current stock price of UK£1.076. If you buy this business for its dividend, you should have an idea of whether Just Group’s dividend is reliable and sustainable. So we need to investigate whether Just Group can afford its dividend, and if the dividend could grow.
View our latest analysis for Just Group
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Just Group is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
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?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Just Group’s earnings per share have plummeted approximately 35% a year over the previous five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Just Group’s dividend payments per share have declined at 0.6% per year on average over the past 10 years, which is uninspiring.
The Bottom Line
From a dividend perspective, should investors buy or avoid Just Group? Just Group’s earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It doesn’t appear an outstanding opportunity, but could be worth a closer look.
Wondering what the future holds for Just Group? See what the three analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.
