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Why It Might Not Make Sense To Buy JMP Group LLC (NYSE:JMP) For Its Upcoming Dividend

Simply Wall St

It looks like JMP Group LLC (NYSE:JMP) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 14th of November in order to be eligible for this dividend, which will be paid on the 29th of November.

JMP Group's upcoming dividend is US$0.04 a share, following on from the last 12 months, when the company distributed a total of US$0.2 per share to shareholders. Last year's total dividend payments show that JMP Group has a trailing yield of 4.9% on the current share price of $3.2554. 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 investigate whether JMP Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for JMP Group

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. JMP Group reported a loss last year, so it's not great to see that it has continued paying a dividend.

Click here to see how much of its profit JMP Group paid out over the last 12 months.

NYSE:JMP Historical Dividend Yield, November 9th 2019

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. JMP Group was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. JMP Group has delivered 15% dividend growth per year on average over the past ten years.

Get our latest analysis on JMP Group's balance sheet health here.

To Sum It Up

Is JMP Group worth buying for its dividend? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Want to learn more about JMP Group's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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.

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. Thank you for reading.