Important news for shareholders and potential investors in Jernigan Capital Inc (NYSE:JCAP): The dividend payment of US$0.35 per share will be distributed into shareholder on 13 July 2018, and the stock will begin trading ex-dividend at an earlier date, 29 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Jernigan Capital’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Jernigan Capital
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- 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 it have the ability to keep paying its dividends going forward?
How does Jernigan Capital fare?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. Jernigan Capital has a trailing twelve-month payout ratio of 136.37%, meaning that a portion of dividend payments are funded by retained earnings. In the near future, analysts are predicting a more sensible payout ratio of 53.77%, leading to a dividend yield of around 7.50%. Moreover, EPS should increase to $2.11, 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.In terms of its peers, Jernigan Capital generates a yield of 7.50%, which is high for REITs stocks.
Taking all the above into account, Jernigan Capital is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. There are three fundamental factors you should further examine:
- 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.
- 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.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.