Yahoo Finance J. Smart (Contractors) (LON:SMJ) Has Affirmed Its Dividend Of £0.0096
J. Smart & Co. (Contractors) PLC (LON:SMJ) will pay a dividend of £0.0096 on the 3rd of June. This means the annual payment will be 2.6% of the current stock price, which is lower than the industry average.
Check out our latest analysis for J. Smart (Contractors)
J. Smart (Contractors) Is Paying Out More Than It Is Earning
If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, the dividend made up 1,097% of earnings, and the company was generating negative free cash flows. Paying out such a large dividend compared to earnings while also not generating free cash flows is a major warning sign for the sustainability of the dividend as these levels are certainly a bit high.
Looking forward, EPS could fall by 52.5% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 2,296%, which is definitely a bit high to be sustainable going forward.
J. Smart (Contractors) Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of £0.0293 in 2014 to the most recent total annual payment of £0.0323. Dividend payments have grown at less than 1% a year over this period. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
Dividend Growth Potential Is Shaky
The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 52% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.
J. Smart (Contractors)'s Dividend Doesn't Look Sustainable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, J. Smart (Contractors) has 5 warning signs (and 2 which can'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.
