Fidessa Group plc (LON:FDSA) (LSE:FDSA.L) has released results for the year to 31st December to the stock market. They show solid revenue growth across all regions, with the company’s investment spread across a range of geographies providing some stability against uncertainty following the Brexit vote and USA election.
A rise in PBT of 25% meant Fidessa could increase dividends 11% and also pay a special dividend which was 11% higher than last year. This meant its total dividends (including special dividends) were 70.4p for the year, which is a dividend yield of over 3% at today’s share price.
Since 64% of Fidessa’s revenue originated outside of Europe and 73% was denominated in non-sterling currency, it experienced a positive forex effect. With the impact of forex removed, revenue increased 3% and PBT 1% at constant forex. In my view, it should keep benefitting from weaker sterling and I view its non-UK exposure as a positive thing.
Although the company sees an uncertain outlook ahead, it also sees opportunity. It believes there could be opportunity to benefit from regulatory and structural change. I feel this plus positive forex effects could mean a higher ordinary dividend, as well as more special dividends in future.
Fidessa’s 3% yield is lower than the dividend yields of popular income shares Vodafone Group plc (LON:VOD) (LSE:VOD.L), Imperial Brands PLC (LON:IMB) (LSE:IMB.L), easyJet plc (LON:EZJ) (LSE:EZJ.L) and National Grid plc (LON:NG) (LSE:NG.L). For example, National Grid yields 4.9%, Vodafone’s shares yield 6.2%, Imperial Brands yields 4.6% and easyJet’s shares have a yield of 4.1%.
While I think Fidessa has some dividend appeal, it also has an uncertain future. Therefore, I believe there are better income stocks, since I would seek a higher yield given its uncertain future. The likes of Vodafone and easyJet may also have challenges ahead, but they yield more than Fidessa. National Grid and Imperial Brands have less risky business models in my view and more certain dividends.
Therefore, from an income perspective, I think there are better dividend stocks than Fidessa in which to invest for the long term.