Have you been keeping an eye on Jack in the Box Inc’s (NASDAQ:JACK) upcoming dividend of US$0.40 per share payable on the 05 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 17 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Jack in the Box’s latest financial data to analyse its dividend characteristics.
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Jack in the Box pass our checks?
The company currently pays out 36.69% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect JACK’s payout to remain around the same level at 39.03% of its earnings, which leads to a dividend yield of around 2.04%. Moreover, EPS should increase to $4.55.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Jack in the Box as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Jack in the Box produces a yield of 1.80%, which is on the low-side for Hospitality stocks.
Whilst there are few things you may like about Jack in the Box from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three relevant factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for JACK’s future growth? Take a look at our free research report of analyst consensus for JACK’s outlook.
- Valuation: What is JACK worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether JACK is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.