It looks like Juniper Networks, Inc. (NYSE:JNPR) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 28th of February in order to be eligible for this dividend, which will be paid on the 23rd of March.
Juniper Networks’s next dividend payment will be US$0.20 per share, on the back of last year when the company paid a total of US$0.80 to shareholders. Last year’s total dividend payments show that Juniper Networks has a trailing yield of 3.3% on the current share price of $24.14. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Juniper Networks has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Juniper Networks
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Its dividend payout ratio is 76% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth It could become a concern if earnings started to decline. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 62% of the company’s free cash flow last year, which is within a normal range for most dividend-paying organisations.
It’s positive to see that Juniper Networks’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That’s why it’s comforting to see Juniper Networks’s earnings have been skyrocketing, up 24% per annum for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Juniper Networks has delivered an average of 12% per year annual increase in its dividend, based on the past six years of dividend payments. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Final Takeaway
Is Juniper Networks an attractive dividend stock, or better left on the shelf? It’s good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That’s why we’re glad to see Juniper Networks’s earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow – 76% and 62% respectively. Overall, it’s hard to get excited about Juniper Networks from a dividend perspective.
Ever wonder what the future holds for Juniper Networks? See what the 21 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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