Could the dividend payment affect the company's credit metrics or rating by rating agencies?

Impact on credit metrics / rating

The quarterly cash dividend on Fundamental Global’s 8 % cumulative preferred series A is a non‑senior financing cost. Rating agencies treat preferred‑stock dividends as a component of the company’s cash‑flow obligations, but they are ranked behind senior debt in the capital‑structure waterfall. As long as the payout is modest relative to the firm’s operating cash flow, the incremental outflow will have a minimal effect on leverage ratios (e.g., net‑debt/EBITDA or debt/Equity) and therefore is unlikely to trigger a rating downgrade on its own. The key credit‑risk consideration is the cumulative nature of the preferred dividend—if the company were to miss a payment, the accrued amount would increase the financing burden and could erode credit‑metric buffers, prompting a more negative view from agencies. In the current case, the dividend is being paid on schedule, which actually reinforces the company’s commitment to its capital‑structure obligations and can be seen as a positive signal for credit stability.

Trading implications

• Ex‑dividend price adjustment: The common‑stock price will typically drop by roughly the dividend amount on the ex‑div date (mid‑September). Anticipate a short‑term downside pressure, but the move should be limited to the cash‑value of the preferred payout.
• Yield opportunity: The 8 % preferred rate offers a relatively high yield in a low‑rate environment, making the series A securities attractive to income‑focused investors. Expect increased demand for the preferred shares and a possible tightening of the spread relative to comparable preferreds.
• Technical view: The stock is currently trading near its 20‑day moving average with modest upside momentum. A brief pull‑back after the ex‑div date could present a buy‑the‑dip entry for the equity, provided the broader market remains stable. Conversely, if the dividend is perceived as a strain on cash flow, the equity could face downward pressure; monitoring the next earnings release for cash‑flow coverage will be critical.

Actionable take‑away: The dividend itself is not a credit‑rating catalyst, but any missed or delayed preferred payments would be. For now, the dividend reinforces credit health, and traders can exploit the predictable ex‑div price dip for a short‑term equity entry, while also considering a long‑position in the 8 % preferred series A to capture the high yield and potential price appreciation if credit sentiment improves.