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On the 26 October 2018, IG Group Holdings plc (LON:IGG) will be paying shareholders an upcoming dividend amount of UK£0.34 per share. However, investors must have bought the company’s stock before 27 September 2018 in order to qualify for the payment. That means you have only 4 days left! Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at IG Group Holdings’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for IG Group Holdings
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
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It is paying an annual yield above 75% of dividend payers
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It has paid dividend every year without dramatically reducing payout in the past
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Its has increased its dividend per share amount over the past
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It can afford to pay the current rate of dividends from its earnings
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It has the ability to keep paying its dividends going forward
High Yield And Dependable
IG Group Holdings’s dividend yield stands at 5.6%, which is high for Capital Markets stocks. But the real reason IG Group Holdings stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of IGG it has increased its DPS from £0.12 to £0.43 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
The company currently pays out 70.0% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 73.1%, leading to a dividend yield of 5.5%. Furthermore, EPS is forecasted to fall to £0.54 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.