Yahoo Finance IG Group Holdings plc (LON:IGG) Is A Real Dividend Rock Star - Here Is Why
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
If you are an income investor, then IG Group Holdings plc (LON:IGG) should be on your radar. IG Group Holdings plc provides leveraged derivatives and spread betting under the IG brand worldwide. Over the past 10 years, the UK£2.2b market cap company has been growing its dividend payments, from £0.12 to £0.43. Currently yielding 7.3%, let's take a closer look at IG Group Holdings's dividend profile.
Check out 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:
It is paying an annual yield above 75% of dividend payers
It has paid dividend every year without dramatically reducing payout in the past
Its has increased its dividend per share amount over the past
It can afford to pay the current rate of dividends from its earnings
It has the ability to keep paying its dividends going forward
High Yield And Dependable
IG Group Holdings's dividend yield stands at 7.3%, which is high for Capital Markets stocks. But the real reason IG Group Holdings stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. IGG 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. This is an impressive feat, which makes IGG a true dividend rockstar.
The company currently pays out 81% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect IGG's payout to remain around the same level at 89% of its earnings. Assuming a constant share price, this equates to a dividend yield of 7.3%. Furthermore, EPS is forecasted to fall to £0.40 in the upcoming year.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Next Steps:
With IG Group Holdings producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a top dividend generator moving forward. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I've compiled three relevant aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for IGG’s future growth? Take a look at our free research report of analyst consensus for IGG’s outlook.
Valuation: What is IGG worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether IGG is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
