Jerash Holdings (US), Inc. (NASDAQ:JRSH) will pay a dividend of $0.05 on the 29th of November. This means the annual payment is 6.1% of the current stock price, which is above the average for the industry.
View our latest analysis for Jerash Holdings (US)
A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Despite not generating a profit, Jerash Holdings (US) is still paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.
Looking forward, earnings per share is forecast to rise by 78.2% over the next year. While it is good to see income moving in the right direction, it still looks like the company won’t achieve profitability. Unless this can be done in short order, the dividend might be difficult to sustain.
Jerash Holdings (US)’s dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. There hasn’t been much of a change in the dividend over the last 6 years. We like that the dividend hasn’t been shrinking. However we’re conscious that the company hasn’t got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren’t as good as they seem. Over the past five years, it looks as though Jerash Holdings (US)’s EPS has declined at around 42% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn’t be feeling too comfortable.
In summary, while it is good to see that the dividend hasn’t been cut, we think that at current levels the payment isn’t particularly sustainable. 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. The dividend doesn’t inspire confidence that it will provide solid income in the future.
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. Case in point: We’ve spotted 2 warning signs for Jerash Holdings (US) (of which 1 can’t be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
