FMC declares 4Q16 dividend
On December 15, 2016, FMC (FMC) announced a dividend of $0.17 per share for 4Q16. Including this amount, the company will pay dividends of $0.66 per share for fiscal 2016, meaning that dividends per share on a year-over-year basis are flat. The dividend will be paid on January 19, 2017, to shareholders with a record date of December 30, 2016.
Although FMC’s annual dividend for fiscal 2016 is the same as it was in fiscal 2015, FMC’s dividend since 2011 has grown at a CAGR (compounded annual growth rate ) of 17%. In the first nine months of 2016, FMC has paid $66.4 million in dividends. For 4Q16, FMC has approximately 134.7 million shares outstanding. With a payment of $0.17 per share, FMC’s 4Q16 cash dividends will amount to ~$22.2 million.
In the first nine months of 2016, FMC paid out ~$66.4 million in dividends, which translates to a dividend payout ratio of ~34.3%. Since 2011, FMC’s dividend payout ratio has been in the range of 15%–35%.
Operating cash flow and free cash flow
With FMC dividend growth at 17%, we’ll see if FMC’s operating cash flow is strong enough to support its dividend payments. Since 2011, FMC’s operating cash flow has risen at a CAGR of a meager 5.2%, and FMC’s free cash flow has risen at a CAGR of ~11% for the same period. With cash flows growing at a lower rate than the dividend growth rate, FMC doesn’t have enough room to increase the dividend rate unless cash flows improve. This might keep away those investors who look to invest in high-paying dividend stocks.
Investors can hold FMC by investing in the Guggenheim S&P 500 Equal Weight Materials ETF (RTM), which invests 3.9% of its portfolio in IFF. The fund’s top holdings include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON), which have weights of 4.3%, 4.1%, and 4.1%, respectively, as of December 28, 2016.