Jack in the Box (NASDAQ:JACK) Has Announced A Dividend Of $0.44
Jack in the Box Inc. (NASDAQ:JACK) has announced that it will pay a dividend of $0.44 per share on the 27th of March. This means that the annual payment will be 2.5% of the current stock price, which is in line with the average for the industry.
See our latest analysis for Jack in the Box
Jack in the Box's Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. But before making this announcement, Jack in the Box's earnings quite easily covered the dividend. The business is returning a large chunk of its cash to shareholders, which means it is not being used to grow the business.
The next year is set to see EPS grow by 53.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was $0.80, compared to the most recent full-year payment of $1.76. This works out to be a compound annual growth rate (CAGR) of approximately 8.2% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.
We Could See Jack in the Box's Dividend Growing
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Jack in the Box has been growing its earnings per share at 6.0% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Jack in the Box's prospects of growing its dividend payments in the future.
Our Thoughts On Jack in the Box's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Jack in the Box's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would be a touch cautious of relying on this stock primarily for the dividend income.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Jack in the Box (of which 1 is a bit concerning!) you should know about. Is Jack in the Box not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
