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JB Hi-Fi Limited dividend preview

Consumer electronics retailer JB Hi-Fi Limited (ASX: JBH) is due to report its 2014 full year results early next week, and here we take a look at what investors might expect.

The company’s current dividend yield may look low at just over 4%, but is based on having paid a 55 cent fully franked dividend in February and no dividend for the second half of 2013.

Shareholders shouldn’t expect another 55 cent dividend this reporting period, due to the lopsided nature of earnings between the first and second halves. The lead up to Christmas and the New Year generates a substantial portion of the retailer’s annual revenues and earnings, so the first half is almost always stronger than the second.

In the past 3 years, JB Hi-Fi has paid second half dividends of 29 cents, 16 cents and nothing in 2013 as I mentioned above.

Commsec suggests that analysts are expecting a second half dividend of around 23 cents, taking the full year dividend to around 78 cents, putting JB Hi-Fi on a rolling 12-month yield of 4.6%, fully franked.

But following a positive trading update in June, JB Hi-Fi says it expects to report growth in net profit by between 8.3% and 10.8%. That could see the company raise its dividend above market expectations.

While dividends are nice, investors will also want to take note of the company’s outlook. More than a few in the market have written off JB Hi-Fi over the past few years, suggesting that online competition was going to kill its business.

So far, that hasn’t happened, and it reminds me of how successful Flight Centre Travel Group (ASX: FLT) has been, despite the success of online travel booking sites such as Webjet Limited (ASX: WEB).

JB Hi-Fi has been adapting its business to whatever trends are taking place in the consumer electronics space since 2001, even before it listed on the ASX – hence the reason it has been so successful. Its Home business, which sells appliances and white goods, and competes with the likes of Harvey Norman Holdings Limited (ASX: HVN), is but one example.

But the success of the company lies in JB Hi-Fi continuing to adapt.

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