Formula Systems (1985) Announces $0.3587 Dividend—Market Impact on Ex-Dividend Date

Introduction

Formula Systems (1985), trading under the ticker FORTY, has maintained a consistent approach to shareholder returns through dividends. The recent announcement of a cash dividend of $0.3587 per share, with an ex-dividend date of October 14, 2025, aligns with the company’s historical pattern of rewarding shareholders. In a broader industry context, Formula Systems’ dividend yield and payout ratio are comparable to its peers in the software and SaaS sectors, particularly those demonstrating stable cash flow and operational efficiency.

With robust financials highlighted in the latest quarterly report and strong operating income, the company is well-positioned to sustain its dividend payments in the current macroeconomic environment, where rising interest rates and inflationary pressures have pressured many dividend-paying firms.

Dividend Overview and Context

Dividend investing involves understanding key metrics such as dividend yield, payout ratio, and dividend per share (DPS). These metrics help investors evaluate the sustainability and attractiveness of a dividend. The ex-dividend date, in particular, marks the day when the stock trades without the right to the next dividend, typically leading to a price adjustment of approximately one dividend amount (minus a small rounding factor).

With a cash dividend of $0.3587 per share and an ex-dividend date of October 14, 2025, Formula Systems’ stock is expected to see a price drop of a similar magnitude on that day. This adjustment is a normal market function and should not be interpreted as a negative signal regarding the company’s fundamentals.

Backtest Analysis

Historical backtest data on FORTY reveals a consistent pattern of price recovery after the ex-dividend event. Specifically, the stock has shown an average recovery within 3.5 days of the ex-dividend date, with a 67% probability of full price rebound within 15 days after six dividend occurrences.

This rapid recovery suggests strong demand for the stock and a market that quickly revalues the equity to reflect the intrinsic value post-dividend. For long-term investors, this pattern reduces the risk of significant short-term drawdowns and supports a buy-and-hold dividend strategy.

Driver Analysis and Implications

The recent dividend announcement is supported by Formula Systems’ strong financial performance. The latest quarterly report shows an operating income of $118.19 million, total revenue of $1.366 billion, and net income of $91.05 million. These figures highlight the company’s ability to generate consistent cash flow, a critical factor in sustaining regular and growing dividends.

The net income attributable to common shareholders is $36.00 million, or $2.36 per share, indicating a strong earnings base. Using this, the current dividend payout of $0.3587 implies a payout ratio of approximately 15.2%, suggesting a conservative and sustainable approach to distributing profits to shareholders.

From a macroeconomic standpoint, Formula Systems’ dividend resilience reflects broader trends in the SaaS sector, which continues to see strong revenue growth and operating leverage despite global economic volatility. This positions the company to maintain its dividend policy even in uncertain market conditions.

Investment Strategies and Recommendations

• Short-Term Investors: Investors who wish to capture the dividend should ensure ownership of the stock before the ex-dividend date. Given the typical price drop of ~$0.3587, this may be an opportunity for those looking to collect the dividend without significant exposure to price volatility.
• Long-Term Investors: The strong backtest results suggest that holding the stock through ex-dividend periods can be a low-risk approach. The stock’s tendency to recover quickly supports a long-term buy-and-hold strategy, particularly when combined with dividend reinvestment.
• Portfolio Diversification: As with all dividend stocks, investors should consider Formula Systems as part of a well-diversified portfolio. The company’s sector exposure and payout profile make it a reasonable addition to income-focused or value-oriented strategies.

Conclusion & Outlook

Formula Systems’ $0.3587 dividend, announced with an ex-dividend date of October 14, 2025, reflects the company’s strong operational performance and disciplined capital return strategy. The backtested price rebound pattern reinforces the stock’s reliability as a dividend play. For investors, this provides confidence in both the immediate dividend capture opportunity and the long-term potential for consistent returns.

Looking ahead, the next key event for investors will be the upcoming earnings report, which is expected to offer further insight into the company’s financial trajectory. Investors should monitor any developments in operating income and revenue trends, as well as broader market conditions, that could influence the sustainability of future dividend payouts.