Why You Might Be Interested In JBS S.A. (BVMF:JBSS3) For Its Upcoming Dividend

It looks like JBS S.A. (BVMF:JBSS3) is about to go ex-dividend in the next 2 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase JBS' shares before the 25th of November in order to receive the dividend, which the company will pay on the 15th of January.

The company's next dividend payment will be R$1.00 per share, on the back of last year when the company paid a total of R$2.00 to shareholders. Based on the last year's worth of payments, JBS has a trailing yield of 5.8% on the current stock price of R$34.66. If you buy this business for its dividend, you should have an idea of whether JBS's dividend is reliable and sustainable. So we need to investigate whether JBS can afford its dividend, and if the dividend could grow.

Check out our latest analysis for JBS

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. JBS is paying out an acceptable 61% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see JBS's earnings have been skyrocketing, up 222% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, JBS could have strong prospects for future increases to the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, JBS has increased its dividend at approximately 39% 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 JBS got what it takes to maintain its dividend payments? We like JBS's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. JBS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks JBS is facing. We've identified 3 warning signs with JBS (at least 2 which can't be ignored), and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.