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Only 3 Days Left Until Fraser and Neave, Limited (SGX:F99) Trades Ex-Dividend

Simply Wall St

Attention dividend hunters! Fraser and Neave, Limited (SGX:F99) will be distributing its dividend of S$0.015 per share on the 10 June 2019, and will start trading ex-dividend in 3 days time on the 22 May 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at Fraser and Neave's most recent financial data to examine its dividend characteristics in more detail.

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See our latest analysis for Fraser and Neave

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • Does it pay an annual yield higher than 75% of dividend payers?
  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?
  • Has dividend per share amount increased over the past?
  • Is is able to pay the current rate of dividends from its earnings?
  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
SGX:F99 Historical Dividend Yield, May 18th 2019

How does Fraser and Neave fare?

The current trailing twelve-month payout ratio for the stock is 42%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

Reliability is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Fraser and Neave as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Relative to peers, Fraser and Neave generates a yield of 2.6%, which is on the low-side for Food stocks.

Next Steps:

After digging a little deeper into Fraser and Neave's yield, it's easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three essential aspects you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for F99’s future growth? Take a look at our free research report of analyst consensus for F99’s outlook.
  2. Valuation: What is F99 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 F99 is currently mispriced by the market.
  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.