Why You Might Be Interested In Joules Group Plc (LON:JOUL) For Its Upcoming Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Joules Group Plc (LON:JOUL) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 5th of March in order to receive the dividend, which the company will pay on the 7th of April.
Joules Group's next dividend payment will be UK£0.0077 per share, and in the last 12 months, the company paid a total of UK£0.021 per share. Calculating the last year's worth of payments shows that Joules Group has a trailing yield of 1.6% on the current share price of £1.35. If you buy this business for its dividend, you should have an idea of whether Joules Group's dividend is reliable and sustainable. So we need to investigate whether Joules Group can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Joules 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. Fortunately Joules Group's payout ratio is modest, at just 47% of profit. A useful secondary check can be to evaluate whether Joules Group generated enough free cash flow to afford its dividend. Fortunately, it paid out only 25% of its free cash flow in the past year.
It's positive to see that Joules Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Joules Group's earnings have been skyrocketing, up 27% per annum for the past five years. Joules Group is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Joules Group has delivered 21% dividend growth per year on average over the past three years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Has Joules Group got what it takes to maintain its dividend payments? Joules Group has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.
Wondering what the future holds for Joules Group? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
