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Jarvis Securities (LON:JIM) Is Paying Out Less In Dividends Than Last Year

Jarvis Securities plc (LON:JIM) has announced that on 8th of December, it will be paying a dividend of£0.025, which a reduction from last year's comparable dividend. The dividend yield of 7.8% is still a nice boost to shareholder returns, despite the cut.

Check out our latest analysis for Jarvis Securities

Jarvis Securities Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 117% of what it was earning and 92% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

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Over the next year, EPS could expand by 7.2% if the company continues along the path it has been on recently. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 116% over the next year.

historic-dividend
historic-dividend

Jarvis Securities Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of £0.025 in 2012 to the most recent total annual payment of £0.135. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

There Isn't Much Room To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Jarvis Securities has been growing its earnings per share at 7.2% a year over the past five years. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Jarvis Securities' Dividend Doesn't Look Sustainable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The payout levels might be a bit high for our liking, but we can't deny that until now, the payments have been pretty consistent. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Jarvis Securities has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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