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Jardine Matheson Holdings Limited (SGX:J36) will pay a dividend of $1.65 on the 14th of May. This means the annual payment is 5.3% of the current stock price, which is above the average for the industry.
View our latest analysis for Jardine Matheson Holdings
Estimates Indicate Jardine Matheson Holdings' Dividend Coverage Likely To Improve
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Jardine Matheson Holdings is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. This gives us some comfort about the level of the dividend payments.
According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 72%, which makes us pretty comfortable with the sustainability of the dividend.
Jardine Matheson Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.40 in 2015 to the most recent total annual payment of $2.25. This means that it has been growing its distributions at 4.9% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Dividend Has Limited Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. Earnings per share has been sinking by 17% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
Our Thoughts On Jardine Matheson Holdings' Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Jardine Matheson Holdings that you should be aware of before investing. Is Jardine Matheson Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.