Here's Why We're Wary Of Buying J. M. Smucker's (NYSE:SJM) For Its Upcoming Dividend

Readers hoping to buy The J. M. Smucker Company (NYSE:SJM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves a full business day. 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 J. M. Smucker's shares before the 14th of November in order to be eligible for the dividend, which will be paid on the 1st of December.

The company's upcoming dividend is US$1.10 a share, following on from the last 12 months, when the company distributed a total of US$4.40 per share to shareholders. Last year's total dividend payments show that J. M. Smucker has a trailing yield of 4.1% on the current share price of US$107.06. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether J. M. Smucker can afford its dividend, and if the dividend could grow.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. J. M. Smucker's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If J. M. Smucker didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out more than half (68%) of its free cash flow in the past year, which is within an average range for most companies.

See our latest analysis for J. M. Smucker

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.NYSE:SJM Historic Dividend November 9th 2025

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. J. M. Smucker reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

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Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, J. M. Smucker has increased its dividend at approximately 5.6% a year on average.

Remember, you can always get a snapshot of J. M. Smucker's financial health, by checking our visualisation of its financial health, here.

To Sum It Up

Is J. M. Smucker an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with J. M. Smucker. For instance, we've identified 3 warning signs for J. M. Smucker (1 is a bit concerning) you should be aware of.

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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 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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