Is It Smart To Buy John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) Before It Goes Ex-Dividend?
John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase John B. Sanfilippo & Son's shares before the 9th of August in order to be eligible for the dividend, which will be paid on the 25th of August.
The company's upcoming dividend is US$3.00 a share, following on from the last 12 months, when the company distributed a total of US$6.00 per share to shareholders. Based on the last year's worth of payments, John B. Sanfilippo & Son has a trailing yield of 5.9% on the current stock price of $92.46. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether John B. Sanfilippo & Son has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for John B. Sanfilippo & Son
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. John B. Sanfilippo & Son is paying out just 13% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The good news is it paid out just 1.4% of its free cash flow in the last year.
It's positive to see that John B. Sanfilippo & Son's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see how much of its profit John B. Sanfilippo & Son 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see John B. Sanfilippo & Son's earnings per share have risen 14% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. John B. Sanfilippo & Son has delivered 18% dividend growth per year on average over the past eight years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Is John B. Sanfilippo & Son an attractive dividend stock, or better left on the shelf? It's great that John B. Sanfilippo & Son is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.
While it's tempting to invest in John B. Sanfilippo & Son for the dividends alone, you should always be mindful of the risks involved. For example - John B. Sanfilippo & Son has 1 warning sign we think you should be aware of.
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.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
