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Jamieson Wellness Inc. (TSE:JWEL) stock is about to trade ex-dividend in 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Jamieson Wellness' shares before the 29th of November to receive the dividend, which will be paid on the 13th of December.
The company's next dividend payment will be CA$0.21 per share, and in the last 12 months, the company paid a total of CA$0.84 per share. Last year's total dividend payments show that Jamieson Wellness has a trailing yield of 2.3% on the current share price of CA$35.91. If you buy this business for its dividend, you should have an idea of whether Jamieson Wellness's dividend is reliable and sustainable. As a result, readers should always check whether Jamieson Wellness has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Jamieson Wellness
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. It paid out 84% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 78% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.
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?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Jamieson Wellness earnings per share are up 6.2% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.