John Wiley & Sons (NYSE:WLY) Has Affirmed Its Dividend Of $0.3525

The board of John Wiley & Sons, Inc. (NYSE:WLY) has announced that it will pay a dividend of $0.3525 per share on the 9th of January. This means that the annual payment will be 3.1% of the current stock price, which is in line with the average for the industry.

View our latest analysis for John Wiley & Sons

John Wiley & Sons' Distributions May Be Difficult To Sustain

We aren't too impressed by dividend yields unless they can be sustained over time. While John Wiley & Sons is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Looking forward, earnings per share is forecast to expand by 1.3% over the next year. We like to see the company moving towards profitability, but this probably won't be enough for it to post positive net income this year. The healthy cash flows are definitely a good sign though, so we wouldn't panic just yet, especially with the earnings growing.

John Wiley & Sons Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.00 in 2014, and the most recent fiscal year payment was $1.41. This works out to be a compound annual growth rate (CAGR) of approximately 3.5% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Over the past five years, it looks as though John Wiley & Sons' EPS has declined at around 38% a year. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On John Wiley & Sons' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for John Wiley & Sons that investors should know about before committing capital to this stock. Is John Wiley & Sons not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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