Janus Henderson Group plc (NYSE: JHG) announced that it would increase its dividend on August 25 to US $ 0.38. This makes the dividend yield of 3.6%, which is above the industry average.
Janus Henderson Group payment has strong revenue coverage
While it’s great to have a strong dividend yield, we also need to determine if the payout is sustainable. Prior to this announcement, the Janus Henderson Group dividend was comfortably covered by both cash flow and earnings. This indicates that a large portion of the profits are reinvested in the business, with the aim of fueling growth.
Going forward, earnings per share are expected to increase 3.8% over the next year. If the dividend continues according to recent trends, we estimate that the payout ratio will be 44%, which is within the range that puts us at ease with the sustainability of the dividend.
The Janus Henderson group continues to build its track record
The dividend has not suffered a major reduction in the past, but the company has only paid a dividend for 4 years, which is not that long in the grand scheme of things. The dividend went from US $ 1.28 in 2017 to the last annual payment of US $ 1.52. This implies that the company has increased its distributions at an annual rate of approximately 4.4% over that period. Janus Henderson Group has not paid a dividend for a very long time, so we still wouldn’t be excited about its record growth.
The dividend seems likely to increase
Investors who have held shares of the company for the past several years will be pleased with the dividend income they have received. It is encouraging to see that Janus Henderson Group has increased its earnings per share by 14% per year over the past five years. Profits are on the rise and only return a small portion of those profits to shareholders.
Janus Henderson Group Looks Like Excellent Dividend Stock
In summary, it is always positive to see the dividend increase and we are particularly satisfied with its overall sustainability. Profits easily cover distributions and the company generates a lot of cash. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.
Companies with a stable dividend policy are likely to benefit from greater investor interest than those with a more inconsistent approach. However, there are other things for investors to consider when analyzing the performance of stocks. Concrete example: we have spotted 2 warning signs for Janus Henderson Group (1 of which is a bit unpleasant!) to know. If you are a dividend investor, you can also view our curated list of high performing dividend stocks.
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