Why you might be interested in Fidelity National Financial, Inc. (NYSE: FNF) for its next dividend
Readers wishing to buy Fidelity National Financial, Inc. (NYSE: FNF) for its dividend will have to make its move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is generally set at one working day before the registration date which is the deadline by which you must be present in the books of the company as a shareholder to receive the dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. As a result, Fidelity National Financial investors who purchase the shares on or after September 15 will not receive the dividend, which will be paid on September 30.
The company’s next dividend payment will be US $ 0.40 per share, and over the past 12 months, the company has paid a total of US $ 1.60 per share. Based on the value of last year’s payouts, Fidelity National Financial stock has a rolling yield of approximately 3.4% on the current stock price of $ 46.47. Dividends are an important source of income for many shareholders, but the health of the business is crucial to sustaining these dividends. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Fidelity National Financial paid out only 17% of its profits last year, which we believe is cautiously low and leaves plenty of room for unforeseen circumstances.
Companies that pay less dividends than they earn profits generally have more sustainable dividends. The lower the payout ratio, the more leeway the company has before being forced to reduce the dividend.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
NYSE: FNF Historical Dividend September 11, 2021
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If profits fall enough, the company could be forced to cut its dividend. It is encouraging to see that Fidelity National Financial has rapidly increased its profits, increasing 36% per year over the past five years.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past 10 years, Fidelity National Financial has increased its dividend to around 8.3% per year on average. It is encouraging to see the company raising its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.
The bottom line
Should investors buy Fidelity National Financial for the next dividend? When companies grow rapidly and keep the majority of profits within the company, it is usually a sign that reinvesting profits is creating more value than paying dividends to shareholders. This strategy can bring significant added value to shareholders over the long term, provided it is applied without issuing too many new shares. In summary, Fidelity National Financial seems to have some promise as a dividend-paying stock, and we suggest you take a closer look.
In light of this, while Fidelity National Financial has an attractive dividend, it is worth knowing the risks associated with this stock. To help you, we have discovered 3 warning signs for Fidelity National Financial (1 is concerning!) Which you should know before buying the shares.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.