Fox Corporation (NASDAQ:FOXA) has announced an increase in its dividend payment for the upcoming quarter. The dividend will be $0.26 per share, up from the previous year’s payment for the same period. While this raise is a positive development, the dividend yield of 1.5% is only a modest boost to shareholder returns.
Despite the relatively low dividend yield, Fox’s earnings easily cover the dividend. The company has been reinvesting a large proportion of its earnings back into the business. Analysts expect Fox’s earnings per share (EPS) to expand by 50.5% over the next year. If the dividend continues on this path, the payout ratio could be 14% by next year, indicating sustainability.
Fox has a relatively short dividend-paying history, which makes it difficult to predict its stability in different economic environments. The dividend has increased from an annual total of $0.46 in 2019 to the most recent total annual payment of $0.52, representing a compound annual growth rate (CAGR) of approximately 3.1% over that time. While this shows some dividend growth, it is still too early to depend heavily on this dividend.
Looking at Fox’s earnings per share (EPS) over the past five years, there has been a decline of around 6.4% annually. This decline in earnings raises doubts about the future growth of the dividend unless the trend can be reversed. Although earnings are predicted to grow in the next year, it is advisable to remain cautious until a track record of earnings growth is established.
Overall, while it is positive to see an increase in the dividend, Fox may not be an ideal income stock. The company’s dividend payments have been unstable in the past, but in the short term, the dividend appears to be reliable, with the company generating enough cash flow to cover it. Investors should take into account other factors when analyzing stock performance.
It is important to note that companies with a consistent dividend policy generate greater investor confidence than those with an erratic one. However, there are other considerations for investors when analyzing stock performance. If you are interested in investing in Fox or other dividend stocks, it is recommended to review the comprehensive analysis, fair value estimates, risks and warnings, dividends, insider transactions, and financial health provided by Simply Wall St.
Please note that the information provided in this article by Simply Wall St is general in nature and should not be considered financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account individual objectives or financial situations. Simply Wall St aims to provide long-term focused analysis based on unbiased methodology and fundamental data.
Original Story at simplywall.st – 2023-08-13 12:14:16
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