FactSet Research Systems Inc. (NYSE:FDS) stock is about to trade ex-dividend in 2 days time. This means that investors who purchase shares on or after the 27th of February will not receive the dividend, which will be paid on the 19th of March.
FactSet Research Systems's next dividend payment will be US$0.72 per share. Last year, in total, the company distributed US$2.88 to shareholders. Calculating the last year's worth of payments shows that FactSet Research Systems has a trailing yield of 1.0% on the current share price of $299.59. 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.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see FactSet Research Systems paying out a modest 29% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, FactSet Research Systems's earnings per share have been growing at 14% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. FactSet Research Systems has delivered an average of 14% per year annual increase in its dividend, based on the past ten years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Is FactSet Research Systems an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating FactSet Research Systems more closely.
Ever wonder what the future holds for FactSet Research Systems? See what the 16 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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