JLT Mobile Computers (STO:JLT) Has Announced That Its Dividend Will Be Reduced To SEK0.20

JLT Mobile Computers AB (publ)'s (STO:JLT) dividend is being reduced from last year's payment covering the same period to SEK0.20 on the 11th of May. However, the dividend yield of 3.5% is still a decent boost to shareholder returns.

See our latest analysis for JLT Mobile Computers

JLT Mobile Computers Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Looking forward, EPS could fall by 5.5% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 133%, which is definitely a bit high to be sustainable going forward.

JLT Mobile Computers' Dividend Has Lacked Consistency

Looking back, JLT Mobile Computers' dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. Since 2014, the dividend has gone from SEK0.05 total annually to SEK0.20. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth Is Doubtful

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. In the last five years, JLT Mobile Computers' earnings per share has shrunk at approximately 5.5% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

We're Not Big Fans Of JLT Mobile Computers' Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, JLT Mobile Computers has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about. Is JLT Mobile Computers not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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