James River Group Holdings (NASDAQ: JRVR) dividend will be $ 0.30
James River Group Holdings, Ltd. (NASDAQ: JRVR) announced a dividend payment of $ 0.30 per share on June 30. Based on this payment, the dividend yield on the company’s shares will be 3.4%, which is an attractive incentive for shareholder returns.
Check out our latest analysis for James River Group Holdings
James River Group Holdings’ distributions may be difficult to maintain
If the payments aren’t sustainable, a high return for a few years won’t matter much. Although it did not generate a profit, James River Group Holdings continues to pay a dividend. At the same time, it also does not generate free cash flow, which raises concerns about the sustainability of the dividend.
Going forward, earnings per share are expected to increase 84.2% over the next year. This is the right direction to take, but it is not enough to achieve profitability. Unfortunately, for the dividend to stay at current levels, the company absolutely needs to get there as soon as possible.
James River Group Holdings dividend lacks consistency
Looking back, the James River Group Holdings dividend has not been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The first annual payment in the past 6 years was $ 0.64 in 2015, and the most recent year payment was $ 1.20. This means that he increased his distributions by 11% per year during that period. It’s great to see strong growth in dividend payments, but the cuts are cause for concern as it may indicate that the payment policy is too ambitious.
The dividend has limited growth potential
With a relatively volatile dividend, it is even more important to see if earnings per share increase. James River Group Holdings’ EPS has fallen about 33% per year over the past five years. Dividend payments are likely to come under some pressure, unless EPS can get out of the dive it’s in. This is not bad news though, as earnings are expected to rise over the next 12 months – we would just be a little cautious until this becomes a long term trend.
We also draw your attention to the fact that James River Group Holdings has issued shares equivalent to 22% of the outstanding shares. Trying to increase the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus – perpetually pushing a rock uphill. Companies that regularly issue new shares are often sub-optimal from a dividend standpoint.
James River Group Holdings’ dividend doesn’t look great
Overall, while some might be happy that the dividend was not reduced, we believe it could help James River Group Holdings make more regular payments going forward. The company seems to go to a bit of an effort to make such large payments, but it doesn’t look like they can be consistent over time. Overall, the dividend is not reliable enough to turn it into a good income.
Firms with a stable dividend policy will likely benefit from greater investor interest than those with a more inconsistent approach. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. For example, we have identified 4 warning signs for James River Group Holdings (1 shouldn’t be ignored!) Which you should be aware of before investing. We have also set up a list of global stocks with a solid dividend.
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