J. Smart (Contractors) (LON:SMJ) Is Paying Out A Dividend Of £0.0227
The board of J. Smart & Co. (Contractors) PLC (LON:SMJ) has announced that it will pay a dividend on the 29th of January, with investors receiving £0.0227 per share. This means the annual payment will be 2.6% of the current stock price, which is lower than the industry average.
Check out our latest analysis for J. Smart (Contractors)
J. Smart (Contractors) Is Paying Out More Than It Is Earning
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before this announcement, J. Smart (Contractors) was paying out 655% of what it was earning, and not generating any free cash flows either. This high of a dividend payment could start to put pressure on the balance sheet in the future.
EPS is set to fall by 46.9% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 1,217%, which could put the dividend in jeopardy if the company's earnings don't improve.
J. Smart (Contractors) Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from £0.029 total annually to £0.0323. This implies that the company grew its distributions at a yearly rate of about 1.1% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
The Dividend Has Limited Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Over the past five years, it looks as though J. Smart (Contractors)'s EPS has declined at around 47% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.
J. Smart (Contractors)'s Dividend Doesn't Look Sustainable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about J. Smart (Contractors)'s payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would probably look elsewhere for an income investment.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 5 warning signs for J. Smart (Contractors) (of which 2 are a bit unpleasant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
