Attention dividend hunters! Communications Systems Inc (NASDAQ:JCS) will be distributing its dividend of $0.04 per share in 8 days time, on the 02 January 2018, and will start trading ex-dividend on the 14 December 2017. Is this future income a persuasive enough catalyst for investors to think about JCS as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for JCS
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Communications Systems fare?
Communications Systems has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from Communications Systems have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Relative to peers, Communications Systems produces a yield of 4.41%, which is high for communications equipment stocks.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in JCS right now, in terms of its dividend attributes. It may be worth exploring other income stocks as alternatives to JCS or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in JCS for the dividend. But if you are not exclusively a dividend investor, JCS could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Check our latest free fundmental analysis to explore other aspects of JCS.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.