FIH group's (LON:FIH) Dividend Will Be £0.0125

FIH group plc (LON:FIH) will pay a dividend of £0.0125 on the 13th of February. This means the annual payment is 2.8% of the current stock price, which is above the average for the industry.

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FIH group's Distributions May Be Difficult To Sustain

A big dividend yield for a few years doesn't mean much if it can't be sustained. FIH group is unprofitable despite paying a dividend, and it is paying out 1,217% of its free cash flow. These payout levels would generally be quite difficult to keep up.

Recent, EPS has fallen by 15.6%, so this could continue over the next year. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

View our latest analysis for FIH group

FIH group's Dividend Has Lacked Consistency

FIH group has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2017, the annual payment back then was £0.04, compared to the most recent full-year payment of £0.0675. This implies that the company grew its distributions at a yearly rate of about 6.8% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. FIH group might have put its house in order since then, but we remain cautious.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. FIH group's earnings per share has shrunk at 16% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

We're Not Big Fans Of FIH group's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help FIH group make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. The dividend doesn't inspire confidence that it will provide solid income in the future.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for FIH group (of which 2 are significant!) you should know about. Is FIH group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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