Q: Would you still think that FSZ should cut their dividend? Is the dividend covered by cashflow presently?
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5i Research Answer:
FSZ has a high dividend yield of 10%, which has steadily risen over the years as its share price has declined. Its annual dividend payments are roughly $90M, and it generated $162M in free cash flows over the past 12 months. For this reason we feel that the dividend is still appropriate, and given its history of rising free cash flow over the years. Debt levels are high, but with decreasing interest rates, we could see this name show margin expansion as its interest expenses eventually come down with rates.