James Fisher and Sons plc (LON:FSJ) Stock Goes Ex-Dividend In Just Four Days
It looks like James Fisher and Sons plc (LON:FSJ) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 1st of October in order to be eligible for this dividend, which will be paid on the 6th of November.
James Fisher and Sons's next dividend payment will be UK£0.08 per share. Last year, in total, the company distributed UK£0.16 to shareholders. Based on the last year's worth of payments, James Fisher and Sons stock has a trailing yield of around 1.4% on the current share price of £11.5. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for James Fisher and Sons
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. James Fisher and Sons is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether James Fisher and Sons generated enough free cash flow to afford its dividend. Luckily it paid out just 22% of its free cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see James Fisher and Sons's earnings per share have dropped 9.3% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, James Fisher and Sons has lifted its dividend by approximately 1.6% a year on average.
Final Takeaway
Is James Fisher and Sons an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about James Fisher and Sons from a dividend perspective.
On that note, you'll want to research what risks James Fisher and Sons is facing. In terms of investment risks, we've identified 2 warning signs with James Fisher and Sons and understanding them should be part of your investment process.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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