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Have you been keeping an eye on Jacobson Pharma Corporation Limited’s (HKG:2633) upcoming dividend of HK$0.029 per share payable on the 27 September 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 12 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Jacobson Pharma’s latest financial data to analyse its dividend characteristics.

See our latest analysis for Jacobson Pharma

5 checks you should do on a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it the top 25% annual dividend yield payer?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does Jacobson Pharma fare?

Jacobson Pharma has a trailing twelve-month payout ratio of 34.1%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 29.7%, leading to a dividend yield of around 2.4%. However, EPS should increase to HK$0.13, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view Jacobson Pharma as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, Jacobson Pharma has a yield of 2.0%, which is high for Pharmaceuticals stocks but still below the market’s top dividend payers.

Next Steps:

Taking all the above into account, Jacobson Pharma is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant factors you should further research: