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It looks like James Fisher and Sons plc (LON:FSJ) is about to go ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 3rd of October will not receive the dividend, which will be paid on the 1st of November.
James Fisher and Sons's next dividend payment will be UK£0.1 per share. Last year, in total, the company distributed UK£0.3 to shareholders. Based on the last year's worth of payments, James Fisher and Sons stock has a trailing yield of around 1.5% on the current share price of £21. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for James Fisher and Sons
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately James Fisher and Sons's payout ratio is modest, at just 37% of profit. A useful secondary check can be to evaluate whether James Fisher and Sons generated enough free cash flow to afford its dividend. Dividends consumed 62% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at James Fisher and Sons, with earnings per share up 2.9% on average over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past ten years, James Fisher and Sons has increased its dividend at approximately 9.3% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.