Yahoo Finance Should Income Investors Buy FDM Group (Holdings) PLC (LON:FDM) Before Its Ex-Dividend?
Important news for shareholders and potential investors in FDM Group (Holdings) PLC (LON:FDM): The dividend payment of UK£0.14 per share will be distributed into shareholder on 21 September 2018, and the stock will begin trading ex-dividend at an earlier date, 23 August 2018. Is this future income a persuasive enough catalyst for investors to think about FDM Group (Holdings) as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for FDM Group (Holdings)
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is its annual yield among the top 25% of dividend-paying companies?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
How does FDM Group (Holdings) fare?
The current trailing twelve-month payout ratio for the stock is 88.81%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 92.62%, leading to a dividend yield of around 3.62%. In addition to this, EPS should increase to £0.33. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view FDM Group (Holdings) as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, FDM Group (Holdings) produces a yield of 3.05%, which is high for IT stocks but still below the market’s top dividend payers.
Next Steps:
After digging a little deeper into FDM Group (Holdings)’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three fundamental factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for FDM’s future growth? Take a look at our free research report of analyst consensus for FDM’s outlook.
Valuation: What is FDM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FDM is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
