World Fuel Services Corporation (NYSE:INT) Stock Goes Ex-Dividend In Just Four Days

It looks like World Fuel Services Corporation (NYSE:INT) is about to go ex-dividend in the next 4 days. If you purchase the stock on or after the 25th of March, you won't be eligible to receive this dividend, when it is paid on the 9th of April.

World Fuel Services's next dividend payment will be US$0.12 per share. Last year, in total, the company distributed US$0.40 to shareholders. Last year's total dividend payments show that World Fuel Services has a trailing yield of 1.3% on the current share price of $36.71. If you buy this business for its dividend, you should have an idea of whether World Fuel Services's dividend is reliable and sustainable. So we need to investigate whether World Fuel Services can afford its dividend, and if the dividend could grow.

Check out our latest analysis for World Fuel Services

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. World Fuel Services paid out just 23% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 4.6% of its free cash flow as dividends last year, which is conservatively low.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by World Fuel Services's 7.1% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, World Fuel Services has lifted its dividend by approximately 12% a year on average.

The Bottom Line

Is World Fuel Services worth buying for its dividend? World Fuel Services has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of World Fuel Services's dividend merits.

On that note, you'll want to research what risks World Fuel Services is facing. To help with this, we've discovered 2 warning signs for World Fuel Services that you should be aware of before investing in their shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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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. 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.
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