If you are interested in cashing in on James River Group Holdings, Ltd.’s (NASDAQ:JRVR) upcoming dividend of US$0.30 per share, you only have 4 days left to buy the shares before its ex-dividend date, 08 March 2019, in time for dividends payable on the 29 March 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at James River Group Holdings’s most recent financial data to examine its dividend characteristics in more detail.
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- 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 the amount of dividend per share grown over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does James River Group Holdings pass our checks?
James River Group Holdings has a trailing twelve-month payout ratio of 56%, which means that the dividend is covered by earnings. However, going forward, analysts expect JRVR’s payout to fall to 48% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 3.1%. However, EPS should increase to $2.61, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view James River Group Holdings 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, James River Group Holdings generates a yield of 2.9%, which is high for Insurance stocks but still below the market’s top dividend payers.
If James River Group Holdings is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three important aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for JRVR’s future growth? Take a look at our free research report of analyst consensus for JRVR’s outlook.
- Valuation: What is JRVR 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 JRVR 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.