IntegraFin Holdings plc (LON:IHP) has announced that it will be increasing its periodic dividend on the 31st of January to £0.072, which will be 2.9% higher than last year’s comparable payment amount of £0.07. This takes the annual payment to 2.9% of the current stock price, which is about average for the industry.
See our latest analysis for IntegraFin Holdings
Unless the payments are sustainable, the dividend yield doesn’t mean too much. Based on the last payment, IntegraFin Holdings was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
Over the next year, EPS is forecast to expand by 37.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 50% by next year, which is in a pretty sustainable range.
IntegraFin Holdings has been paying dividends for a while, but the track record isn’t stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of £0.064 in 2018 to the most recent total annual payment of £0.102. This works out to be a compound annual growth rate (CAGR) of approximately 8.1% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Earnings have grown at around 4.9% a year for the past five years, which isn’t massive but still better than seeing them shrink. Growth of 4.9% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn’t bad in itself, but unless earnings growth pick up we wouldn’t expect dividends to grow either.
Overall, it’s great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company’s dividend track record isn’t stellar. The payment isn’t stellar, but it could make a decent addition to a dividend portfolio.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we’ve picked out 1 warning sign for IntegraFin Holdings that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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