Advertisement
U.S. markets open in 2 hours 4 minutes
  • S&P Futures

    5,097.75
    -3.75 (-0.07%)
     
  • Dow Futures

    39,159.00
    -30.00 (-0.08%)
     
  • Nasdaq Futures

    17,980.75
    -10.25 (-0.06%)
     
  • Russell 2000 Futures

    2,013.30
    -7.20 (-0.36%)
     
  • Crude Oil

    76.12
    -0.37 (-0.48%)
     
  • Gold

    2,040.90
    -8.50 (-0.41%)
     
  • Silver

    22.52
    -0.46 (-2.01%)
     
  • EUR/USD

    1.0858
    +0.0035 (+0.33%)
     
  • 10-Yr Bond

    4.2600
    0.0000 (0.00%)
     
  • Vix

    14.07
    +0.32 (+2.33%)
     
  • GBP/USD

    1.2696
    +0.0024 (+0.19%)
     
  • USD/JPY

    150.5630
    +0.1230 (+0.08%)
     
  • Bitcoin USD

    50,990.15
    -605.25 (-1.17%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,682.65
    -23.63 (-0.31%)
     
  • Nikkei 225

    39,233.71
    +135.01 (+0.35%)
     

Here's Why We're Wary Of Buying Fidelity National Information Services' (NYSE:FIS) For Its Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Fidelity National Information Services, Inc. (NYSE:FIS) is about to go ex-dividend in just four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. Therefore, if you purchase Fidelity National Information Services' shares on or after the 7th of December, you won't be eligible to receive the dividend, when it is paid on the 22nd of December.

The company's next dividend payment will be US$0.52 per share, and in the last 12 months, the company paid a total of US$2.08 per share. Calculating the last year's worth of payments shows that Fidelity National Information Services has a trailing yield of 3.5% on the current share price of $59.9. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Fidelity National Information Services

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fidelity National Information Services lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable.

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?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Fidelity National Information Services reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Fidelity National Information Services has delivered an average of 9.0% per year annual increase in its dividend, based on the past 10 years of dividend payments.

We update our analysis on Fidelity National Information Services every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Is Fidelity National Information Services worth buying for its dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Fidelity National Information Services. For example - Fidelity National Information Services has 1 warning sign we think you should be aware of.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.

Advertisement