Yahoo Finance Jardine Matheson Holdings (SGX:J36) Is Increasing Its Dividend To $0.60
Jardine Matheson Holdings Limited (SGX:J36) has announced that it will be increasing its dividend from last year's comparable payment on the 11th of October to $0.60. This takes the dividend yield to 4.6%, which shareholders will be pleased with.
View our latest analysis for Jardine Matheson Holdings
Jardine Matheson Holdings' Dividend Is Well Covered By Earnings
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the company was paying out 128% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 17%. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.
Analysts expect a massive rise in earnings per share in the next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 32%, which is in a comfortable range for us.
Jardine Matheson Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $1.35, compared to the most recent full-year payment of $2.20. This implies that the company grew its distributions at a yearly rate of about 5.0% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend Has Limited Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Jardine Matheson Holdings' EPS has fallen by approximately 25% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Jardine Matheson Holdings will make a great income stock. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 3 warning signs for Jardine Matheson Holdings that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
