The Motley Fool

Read this before buying FlexiGroup Limited shares for its dividend

The FlexiGroup Limited (ASX: FXL) share price has zoomed 10% higher on the ASX today, sitting at $1.65 at the time of writing.

If you’ve been thinking of buying shares in the financial services group for its juicy, fully franked divided, there are a few things you need to know today.

The first is that shares will go ex-dividend on Wednesday March 6, 2019.  The ‘ex-date’ is when the shares start selling without the value of its next dividend payment so an investor needs to own the shares before the ex-date to receive the dividend. Flexigroup’s dividend will then be paid on Frida,y April 12, 2019.

What is FlexiGroup’s dividend yield?

At its recent half year result,s Flexigroup declared a final dividend of 3.85 cents per share for the half year. This was flat on the prior year and at the current share price, the company offers a trailing dividend yield of around 4.7% which comes fully franked.

Source: FlexiGroup Limited 1H19 presentation

Is the dividend sustainable going forward?

This is a great question to ask before buying any company for its income potential.

At the company’s half-year update last week FlexiGroup provided earnings guidance for the full 2019 financial year of Cash Net Profit After Tax (NPAT) of between $76m and $80m.

The company’s use of “cash NPAT” adjusts for ‘material infrequent items’ as well as the ‘amortisation of acquired intangibles’ and sits lower than the cash NPAT of $88.2m for the 2018 financial year.

However, going forward, all eyes will be on Flexigroup’s ‘buy now, pay later’ business which has been growing swiftly and going head-to-head with hot stock Afterpay Touch Group Ltd (ASX: APT).

In addition to FlexiGroup, there are several other companies going ex-dividend on March 6, including:

  • Hansen Technologies Limited (ASX: HSN)
  • Event Hospitality and Entertainment Ltd (ASX: EVT)
  • Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC)

When it comes to picking strong, high yielding businesses to supplement your income though, we think this company should be at the top of your watch-list today.

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Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hansen Technologies. The Motley Fool Australia owns shares of and has recommended Event Hospitality & Entertainment. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited and Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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