Fraser and Neave: A Dividend with Mixed Feelings

Fraser and Neave announces a dividend payment of 0.04 SGD per share on February 14 – corresponding to a dividend yield of 4.0%. This figure is below the industry average and brings both advantages and challenges. Fraser and Neave’s profit adequately covers the dividend, suggesting a significant reinvestment in the company. However, without substantial improvements, earnings per share could decline by 0.3% next year. The estimated payout ratio of 50% seems comfortable as it allows room for further company growth. Although the company has a long dividend history, there have been cuts in the past ten years. Since 2014, the annual payment has decreased from 0.14 SGD to the current 0.055 SGD. A decline of about 8.9% annually indicates potential challenges. The dividend development is almost reminiscent of the melting of a glacier, and it is noted that earnings per share have hardly changed over five years. Despite stable payments, Fraser and Neave does not currently look like the ideal dividend stock. Liquidity would be available to maintain the dividend, but historically the company has shown less consistency. Investors appreciate consistent dividend strategies, but it is advisable to consider other factors when analyzing a company. There are two warning signs at Fraser and Neave, one of which is concerning. Those looking for stable dividend stocks might want to explore elsewhere.