4 Days Left Until FSE Services Group Limited (HKG:331) Trades Ex-Dividend
Readers hoping to buy FSE Services Group Limited (HKG:331) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 11th of December in order to receive the dividend, which the company will pay on the 23rd of December.
FSE Services Group's next dividend payment will be HK$0.12 per share, and in the last 12 months, the company paid a total of HK$0.22 per share. Based on the last year's worth of payments, FSE Services Group stock has a trailing yield of around 6.0% on the current share price of HK$3.66. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for FSE Services Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. FSE Services Group paid out a comfortable 40% of its profit last year. A useful secondary check can be to evaluate whether FSE Services Group generated enough free cash flow to afford its dividend. It paid out more than half (73%) of its free cash flow in the past year, which is within an average range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit FSE Services Group paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at FSE Services Group, with earnings per share up 7.2% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. FSE Services Group has delivered 22% dividend growth per year on average over the past four years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
From a dividend perspective, should investors buy or avoid FSE Services Group? Earnings per share growth has been modest, and it's interesting that FSE Services Group is paying out less than half of its earnings and more than half its cash flow to shareholders in the form of dividends. In summary, it's hard to get excited about FSE Services Group from a dividend perspective.
Want to learn more about FSE Services Group? Here's a visualisation of its historical rate of revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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. Thank you for reading.
