Jamieson Wellness' (TSE:JWEL) Upcoming Dividend Will Be Larger Than Last Year's

Jamieson Wellness Inc. (TSE:JWEL) will increase its dividend from last year's comparable payment on the 15th of September to CA$0.19. This makes the dividend yield 2.9%, which is above the industry average.

See our latest analysis for Jamieson Wellness

Jamieson Wellness' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last dividend, Jamieson Wellness is earning enough to cover the payment, but then it makes up 112% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

The next year is set to see EPS grow by 105.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

Jamieson Wellness Doesn't Have A Long Payment History

Jamieson Wellness' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of CA$0.32 in 2017 to the most recent total annual payment of CA$0.76. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. Jamieson Wellness has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Jamieson Wellness has impressed us by growing EPS at 56% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Jamieson Wellness could prove to be a strong dividend payer.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Jamieson Wellness will make a great income stock. While Jamieson Wellness is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, Jamieson Wellness has 4 warning signs (and 1 which is potentially serious) we think you should know about. Is Jamieson Wellness not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.