Yahoo Finance Only 4 Days Left Until Japara Healthcare Limited (ASX:JHC) Trades Ex-Dividend,
If you are interested in cashing in on Japara Healthcare Limited’s (ASX:JHC) upcoming dividend of AU$0.037 per share, you only have 4 days left to buy the shares before its ex-dividend date, 27 September 2018, in time for dividends payable on the 30 October 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Japara Healthcare’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for Japara Healthcare
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Japara Healthcare fare?
The company currently pays out 88.3% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect JHC’s payout to increase to 97.5% of its earnings, which leads to a dividend yield of around 6.4%. However, EPS is forecasted to fall to A$0.078 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Japara Healthcare as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Japara Healthcare produces a yield of 5.6%, which is high for Healthcare stocks.
Next Steps:
If you are building an income portfolio, then Japara Healthcare is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three relevant factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for JHC’s future growth? Take a look at our free research report of analyst consensus for JHC’s outlook.
Valuation: What is JHC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether JHC is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
