Stella-Jones (TSE:SJ) Is Paying Out A Larger Dividend Than Last Year
Stella-Jones Inc. (TSE:SJ) will increase its dividend on the 22nd of April to CA$0.20. This will take the annual payment to 1.9% of the stock price, which is above what most companies in the industry pay.
Check out our latest analysis for Stella-Jones
Stella-Jones' Earnings Easily Cover the Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Stella-Jones' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
EPS is set to fall by 1.5% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 24%, which we are pretty comfortable with and we think is feasible on an earnings basis.
Stella-Jones Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was CA$0.13 in 2012, and the most recent fiscal year payment was CA$0.80. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
We Could See Stella-Jones' Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. Stella-Jones has seen EPS rising for the last five years, at 10.0% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Stella-Jones' prospects of growing its dividend payments in the future.
Stella-Jones Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Stella-Jones is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. As an example, we've identified 1 warning sign for Stella-Jones that you should be aware of before investing. Is Stella-Jones 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.
