Just Life Group (NZSE:JLG) Is Due To Pay A Dividend Of NZ$0.0082

The board of Just Life Group Limited (NZSE:JLG) has announced that it will pay a dividend on the 20th of September, with investors receiving NZ$0.0082 per share. The dividend yield is 3.0% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Just Life Group

Just Life Group's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Just Life Group's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

EPS is set to fall by 2.0% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, the payout ratio in 12 months could be 67%, which is more comfortable than the current payout ratio.

Just Life Group's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from an annual total of NZ$0.02 in 2017 to the most recent total annual payment of NZ$0.012. Doing the maths, this is a decline of about 8.2% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend's Growth Prospects Are Limited

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. However, Just Life Group's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Just Life Group's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Just Life Group has 4 warning signs (and 2 which don't sit too well with us) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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