Will JD.com Ever Pay A Dividend?

Focusing on dividend-paying companies – preferably those that increase their payouts each and every year – is a tried-and-true strategy to weather all sorts of economic storms. The consistently of receiving a cash payment every single quarter helps alleviate the volatility that inevitably shows up in business performance and certainly with day-to-day fluctuations in stock prices.

More importantly, a long record of paying and increasing dividends is a signal of a mature and enduring business that generates more cash than it requires.

Of course, the counterpoint to this notion is that an income investor misses out on all sorts of fast-growing companies that have not yet decided to start paying a dividend. A good example of this would be JD.com (JD), which has returned nearly 25% per year for the last five years.

With such strong returns, income investors might wonder if JD.com will ever pay a dividend. This article will attempt to answer that question.

Business Overview

Founded in 1998 and headquartered in China, JD.com Inc. is China’s largest online retailer and its biggest overall retailer. The company is a one-stop e-commerce platform providing over 440 million active customers access to products. Through the company’s logistics network and data-driven technologies, customers enjoy same- and next-day delivery as a standard service.

JD Worldwide allows brands from around the world to sell directly to Chinese customers, even those that do not have a physical presence in the country. U.S. investors can initiate an ownership stake via American Depository Shares (ADS), representing two ordinary shares, traded on the Nasdaq exchange with the “JD” ticker.

Last year the company generated $82.9 billion in sales and earnings-per-ADS of $1.18. For the nine months ending September 30th, 2020 JD.com has generated $76.8 billion in sales and earnings-per-ADS of $2.36. Roughly 88% of the sales of the $138 billion market capitalization company’s revenues are derived from products, with the remainder from services.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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