How Does Jernigan Capital Inc (NYSE:JCAP) Fare As A Dividend Stock?

A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Jernigan Capital Inc (NYSE:JCAP) has returned to shareholders over the past 3 years, an average dividend yield of 8.00% annually. Should it have a place in your portfolio? Let’s take a look at Jernigan Capital in more detail. Check out our latest analysis for Jernigan Capital

5 questions I ask before picking a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

  • Is their annual yield among the top 25% of dividend payers?
  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?
  • Has dividend per share risen in the past couple of years?
  • Can it afford to pay the current rate of dividends from its earnings?
  • Will the company be able to keep paying dividend based on the future earnings growth?

NYSE:JCAP Historical Dividend Yield June 15th 18
NYSE:JCAP Historical Dividend Yield June 15th 18

How well does Jernigan Capital fit our criteria?

REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. The current trailing twelve-month payout ratio for JCAP is 136.37%, meaning that a portion of dividend payments are funded by retained earnings. However, going forward, analysts expect JCAP’s payout to fall into a more sustainable range of 53.31% of its earnings, which leads to a dividend yield of around 7.35%. Moreover, EPS should increase to $2.15, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Jernigan Capital as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Jernigan Capital generates a yield of 7.35%, which is high for REITs stocks.

Next Steps:

If you are building an income portfolio, then Jernigan Capital is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three key factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for JCAP’s future growth? Take a look at our free research report of analyst consensus for JCAP’s outlook.
  2. Valuation: What is JCAP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether JCAP is currently mispriced by the market.
  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.