Johnson Outdoors Inc. (NASDAQ:JOUT) Passed Our Checks, And It's About To Pay A US$0.17 Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Johnson Outdoors Inc. (NASDAQ:JOUT) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 8th of April to receive the dividend, which will be paid on the 23rd of April.
Johnson Outdoors's upcoming dividend is US$0.17 a share, following on from the last 12 months, when the company distributed a total of US$0.68 per share to shareholders. Looking at the last 12 months of distributions, Johnson Outdoors has a trailing yield of approximately 1.2% on its current stock price of $58.68. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Johnson Outdoors
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Johnson Outdoors paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Johnson Outdoors generated enough free cash flow to afford its dividend. The good news is it paid out just 15% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit Johnson Outdoors paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Johnson Outdoors has grown its earnings rapidly, up 42% a year for the past five years. Johnson Outdoors earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last six years, Johnson Outdoors has lifted its dividend by approximately 15% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Has Johnson Outdoors got what it takes to maintain its dividend payments? We love that Johnson Outdoors is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Johnson Outdoors looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
While it's tempting to invest in Johnson Outdoors for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for Johnson Outdoors that we strongly recommend you have a look at before investing in the company.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
