International Consolidated Airlines Group, S.A. (LON:IAG) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 28th of November in order to be eligible for this dividend, which will be paid on the 2nd of December.
International Consolidated Airlines Group's next dividend payment will be UK£0.12 per share. Last year, in total, the company distributed UK£0.31 to shareholders. Last year's total dividend payments show that International Consolidated Airlines Group has a trailing yield of 4.8% on the current share price of £5.552. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see International Consolidated Airlines Group paying out a modest 28% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 76% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.
It's positive to see that International Consolidated Airlines Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see International Consolidated Airlines Group's earnings have been skyrocketing, up 76% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, four years ago, International Consolidated Airlines Group has lifted its dividend by approximately 12% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
From a dividend perspective, should investors buy or avoid International Consolidated Airlines Group? Earnings per share have grown at a nice rate in recent times and over the last year, International Consolidated Airlines Group paid out less than half its earnings and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.
Ever wonder what the future holds for International Consolidated Airlines Group? See what the 26 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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