In This Article:
Joyce Corporation Ltd (ASX:JYC) stock is about to trade ex-dividend in four days. You will need to purchase shares before the 11th of March to receive the dividend, which will be paid on the 9th of April.
Joyce's upcoming dividend is AU$0.07 a share, following on from the last 12 months, when the company distributed a total of AU$0.14 per share to shareholders. Looking at the last 12 months of distributions, Joyce has a trailing yield of approximately 5.7% on its current stock price of A$2.47. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. 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 Joyce
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Joyce distributed an unsustainably high 158% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. A useful secondary check can be to evaluate whether Joyce generated enough free cash flow to afford its dividend. The good news is it paid out just 13% of its free cash flow in the last year.
It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Joyce fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.
Click here to see how much of its profit Joyce paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Joyce's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Joyce has delivered 13% dividend growth per year on average over the past 10 years.