Yahoo Finance Does Just Group Plc (LON:JUST) Have A Place In Your Portfolio?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the last few years Just Group Plc (LON:JUST) has paid a dividend to shareholders. Today it yields 4.3%. Should it have a place in your portfolio? Let’s take a look at Just Group in more detail.
View our latest analysis for Just Group
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How well does Just Group fit our criteria?
Just Group has a trailing twelve-month payout ratio of 16%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 18%, leading to a dividend yield of 4.4%. However, EPS is forecasted to fall to £0.14 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Just Group 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.
Compared to its peers, Just Group generates a yield of 4.3%, which is on the low-side for Insurance stocks.
Next Steps:
If you are building an income portfolio, then Just Group is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for JUST’s future growth? Take a look at our free research report of analyst consensus for JUST’s outlook.
Valuation: What is JUST 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 JUST 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.
