Advertisement
UK markets close in 2 hours 1 minute
  • FTSE 100

    7,961.64
    +29.66 (+0.37%)
     
  • FTSE 250

    19,887.80
    +77.14 (+0.39%)
     
  • AIM

    744.02
    +1.91 (+0.26%)
     
  • GBP/EUR

    1.1694
    +0.0025 (+0.22%)
     
  • GBP/USD

    1.2636
    -0.0002 (-0.02%)
     
  • Bitcoin GBP

    56,128.20
    +964.06 (+1.75%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,250.93
    +2.44 (+0.05%)
     
  • DOW

    39,747.77
    -12.31 (-0.03%)
     
  • CRUDE OIL

    82.33
    +0.98 (+1.20%)
     
  • GOLD FUTURES

    2,226.60
    +13.90 (+0.63%)
     
  • NIKKEI 225

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

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

    18,492.81
    +15.72 (+0.09%)
     
  • CAC 40

    8,213.93
    +9.12 (+0.11%)
     

FMC (NYSE:FMC) Is Increasing Its Dividend To $0.58

FMC Corporation (NYSE:FMC) will increase its dividend from last year's comparable payment on the 20th of July to $0.58. This makes the dividend yield about the same as the industry average at 1.9%.

Check out our latest analysis for FMC

FMC's Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, FMC's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 39.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

FMC Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.36, compared to the most recent full-year payment of $2.32. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. FMC has seen EPS rising for the last five years, at 27% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like FMC's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

ADVERTISEMENT

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for FMC (1 is a bit concerning!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here