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Johnson Matthey Plc (LON:JMAT): Ex-Dividend Is In 4 Days

Investors who want to cash in on Johnson Matthey Plc’s (LON:JMAT) upcoming dividend of UK£0.23 per share have only 4 days left to buy the shares before its ex-dividend date, 29 November 2018, in time for dividends payable on the 05 February 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Johnson Matthey can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

See our latest analysis for Johnson Matthey

5 checks you should do on a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

  • Is it the top 25% annual dividend yield payer?
  • Has it paid dividend every year without dramatically reducing payout in the past?
  • Has dividend per share amount increased over the past?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Will it have the ability to keep paying its dividends going forward?
LSE:JMAT Historical Dividend Yield November 24th 18

Does Johnson Matthey pass our checks?

The company currently pays out 52% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect JMAT’s payout to fall to 37% of its earnings, which leads to a dividend yield of around 3.0%. However, EPS should increase to £2.18, 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 there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. JMAT has increased its DPS from £0.41 to £0.80 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.

Relative to peers, Johnson Matthey generates a yield of 2.6%, which is high for Chemicals stocks but still below the market’s top dividend payers.

Next Steps:

With this in mind, I definitely rank Johnson Matthey as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for JMAT’s future growth? Take a look at our free research report of analyst consensus for JMAT’s outlook.
  2. Valuation: What is JMAT 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 JMAT is currently mispriced by the market.
  3. Other 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 editorial-team@simplywallst.com.