Jocil Limited (NSE: JOCIL) is set to trade ex-dividend within the next three days. The ex-dividend date is generally set at one working day before the registration date which is the deadline by which you must be present in the books of the company as a shareholder to receive the dividend. The ex-dividend date is an important date to know, as any purchase of shares made after this date may mean a late settlement which does not appear on the record date. In other words, investors can buy Jocil shares before September 8 in order to be able to claim the dividend which will be paid out on October 22.
The company’s next dividend will be 3.00 per share. Last year, in total, the company distributed 3.00 to shareholders. Looking at the last 12 months of distributions, Jocil has a rolling return of around 1.2% on its current price of 244.7. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining those dividends. It is therefore necessary to check whether dividend payments are covered and whether profits are growing.
See our latest review for Jocil
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Jocil pays only 22% of his profit after tax, which is comfortably low and leaves a lot of leeway in the event of adverse events. Yet cash flow is usually more important than earnings in assessing dividend sustainability, so we always need to check whether the company has generated enough cash to pay its dividend. Fortunately, his dividend payments only took 40% of the free cash flow he generated, which is a comfortable payout ratio.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to see how much of his profits Jocil has paid in the last 12 months.
Have profits and dividends increased?
Companies with declining profits are riskier for dividend shareholders. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. Readers will then understand why we are concerned that Jocil’s earnings per share have fallen 7.8% per year over the past five years. When earnings per share decrease, the maximum amount of dividends that can be paid also decreases.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Jocil’s dividend payouts per share have declined 2.8% per year on average over the past 10 years, which is not inspiring. While it’s not great that earnings and dividends per share have fallen in recent years, we’re encouraged that management has cut the dividend rather than risking over-committing the company in a risky attempt to keep the dividends going. returns to shareholders.
Should investors buy Jocil for the next dividend? Jocil has comfortably low cash flow and payout ratios, which can mean the dividend is sustainable even in the face of a sharp drop in earnings per share. Nonetheless, we consider declining profits to be a harbinger. In summary, it’s hard to get excited about Jocil from a dividend standpoint.
With this in mind, an essential part of in-depth stock research is being aware of the risks stocks currently face. Every business has risks, and we have spotted 3 warning signs for Jocil you should know.
If you decide to trade Jocil, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account. Promoted
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.