It looks like Just Life Group Limited (NZSE:JLG) is about to go ex-dividend in the next 4 days. You can purchase shares before the 11th of March in order to receive the dividend, which the company will pay on the 19th of March.

Just Life Group's next dividend payment will be NZ$0.01 per share. Last year, in total, the company distributed NZ$0.024 to shareholders. Last year's total dividend payments show that Just Life Group has a trailing yield of 2.6% on the current share price of NZ$0.94. If you buy this business for its dividend, you should have an idea of whether Just Life Group's dividend is reliable and sustainable. As a result, readers should always check whether Just Life Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Just Life Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Just Life Group is paying out an acceptable 62% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 19% of its cash flow last year.

It's positive to see that Just Life Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Just Life Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Just Life Group's earnings have been skyrocketing, up 34% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Just Life Group has delivered an average of 4.7% per year annual increase in its dividend, based on the past four years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Just Life Group is keeping back more of its profits to grow the business.

To Sum It Up

Is Just Life Group worth buying for its dividend? We like Just Life Group's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. There's a lot to like about Just Life Group, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Just Life Group is facing. Case in point: We've spotted 2 warning signs for Just Life Group you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

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