JDE Peet's N.V. (AMS:JDEP) Is About To Go Ex-Dividend, And It Pays A 3.0% Yield

JDE Peet's N.V. (AMS:JDEP) is about to trade ex-dividend in the next three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase JDE Peet's' shares on or after the 7th of July, you won't be eligible to receive the dividend, when it is paid on the 11th of July.

The company's upcoming dividend is €0.37 a share, following on from the last 12 months, when the company distributed a total of €0.73 per share to shareholders. Looking at the last 12 months of distributions, JDE Peet's has a trailing yield of approximately 3.0% on its current stock price of €24.44. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. JDE Peet's is paying out an acceptable 63% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether JDE Peet's generated enough free cash flow to afford its dividend. It distributed 33% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that JDE Peet's'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.

See our latest analysis for JDE Peet's

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. JDE Peet's's earnings per share have fallen at approximately 9.6% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past four years, JDE Peet's has increased its dividend at approximately 1.1% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid JDE Peet's? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. To summarise, JDE Peet's looks okay on this analysis, although it doesn't appear a stand-out opportunity.

Ever wonder what the future holds for JDE Peet's? See what the 14 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.