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Jackson Financial Inc. (NYSE:JXN) Looks Interesting, And It’s About To Pay A Dividend

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It looks like Jackson Financial Inc. (NYSE:JXN) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before a company’s record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company’s books on the record date. In other words, investors can purchase Jackson Financial’s shares before the 30th of November in order to be eligible for the dividend, which will be paid on the 15th of December.

The company’s next dividend payment will be US$0.55 per share, on the back of last year when the company paid a total of US$2.20 to shareholders. Based on last year’s value of payments, Jackson Financial has a trailing yield of 5.8% on the current stock price of $37.74. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it’s growing.

Our analysis indicates that JXN is potentially undervalued!

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Jackson Financial has a low and conservative payout ratio of just 2.7% of its income after tax.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

NYSE:JXN Historic Dividend November 25th 2022

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That’s why it’s comforting to see Jackson Financial’s earnings have been skyrocketing, up 449% per annum for the past three years.

Given that Jackson Financial has only been paying a dividend for a year, there’s not much of a past history to draw insight from.

The Bottom Line

Has Jackson Financial got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Jackson Financial appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.

While it’s tempting to invest in Jackson Financial for the dividends alone, you should always be mindful of the risks involved. For example, we’ve found 2 warning signs for Jackson Financial (1 is a bit concerning!) that deserves your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Valuation is complex, but we’re helping make it simple.

Find out whether Jackson Financial is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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 into account 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.

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