Advertisement
UK markets close in 35 minutes
  • FTSE 100

    7,964.25
    +32.27 (+0.41%)
     
  • FTSE 250

    19,891.54
    +80.88 (+0.41%)
     
  • AIM

    743.81
    +1.70 (+0.23%)
     
  • GBP/EUR

    1.1692
    +0.0023 (+0.20%)
     
  • GBP/USD

    1.2628
    -0.0010 (-0.08%)
     
  • Bitcoin GBP

    56,527.68
    +1,897.74 (+3.47%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.77
    +6.28 (+0.12%)
     
  • DOW

    39,781.62
    +21.54 (+0.05%)
     
  • CRUDE OIL

    82.71
    +1.36 (+1.67%)
     
  • GOLD FUTURES

    2,234.60
    +21.90 (+0.99%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,494.52
    +17.43 (+0.09%)
     
  • CAC 40

    8,210.17
    +5.36 (+0.07%)
     

FDM Group (Holdings) plc (LON:FDM) Stock Goes Ex-Dividend In Just Four Days

It looks like FDM Group (Holdings) plc (LON:FDM) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, FDM Group (Holdings) investors that purchase the stock on or after the 5th of August will not receive the dividend, which will be paid on the 3rd of September.

The company's next dividend payment will be UK£0.15 per share. Last year, in total, the company distributed UK£0.47 to shareholders. Based on the last year's worth of payments, FDM Group (Holdings) stock has a trailing yield of around 3.9% on the current share price of £11.84. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for FDM Group (Holdings)

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. FDM Group (Holdings) distributed an unsustainably high 155% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. FDM Group (Holdings) paid out more free cash flow than it generated - 114%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

ADVERTISEMENT

As FDM Group (Holdings)'s dividend was not well covered by either earnings or cash flow, we would be concerned that this dividend could be at risk over the long term.

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

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at FDM Group (Holdings), with earnings per share up 6.2% on average over the last five years. Earnings per share have been growing comfortably, although unfortunately the company is paying out more of its profits than we're comfortable with over the long term.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past six years, FDM Group (Holdings) has increased its dividend at approximately 21% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid FDM Group (Holdings)? The dividends are not well covered by either income or free cash flow, although at least earnings per share are slowly increasing. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.

Although, if you're still interested in FDM Group (Holdings) and want to know more, you'll find it very useful to know what risks this stock faces. Our analysis shows 1 warning sign for FDM Group (Holdings) and you should be aware of it before buying any shares.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.