Why it might not make sense to buy Fidelity National Information Services, Inc. ($FIS) for its upcoming dividend.

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Fidelity National Information Services, Inc. (NYSE:FIS) is about to go ex-dividend in just 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Fidelity National Information Services' shares on or after the 8th of June will not receive the dividend, which will be paid on the 23rd of June.

The company's next dividend payment will be US$0.52 per share. Last year, in total, the company distributed US$2.08 to shareholders. Based on the last year's worth of payments, Fidelity National Information Services stock has a trailing yield of around 3.8% on the current share price of $55.38. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Fidelity National Information Services has been able to grow its dividends, or if the dividend might be cut.

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fidelity National Information Services paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Fidelity National Information Services reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Fidelity National Information Services has lifted its dividend by approximately 10% a year on average.

The Bottom Line

Should investors buy Fidelity National Information Services for the upcoming dividend? It's hard to get past the idea of Fidelity National Information Services paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that being said, if you're still considering Fidelity National Information Services as an investment, you'll find it beneficial to know what risks this stock is facing.

https://uk.sports.yahoo.com/news/why-might-not-sense-buy-120835879.html?guccounter=1