Should International Consolidated Airlines Group SA. (LON:IAG) Be Part Of Your Dividend Portfolio?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. In the past 3 years International Consolidated Airlines Group SA. (LSE:IAG) has returned an average of 4.00% per year to investors in the form of dividend payouts. Does International Consolidated Airlines Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for International Consolidated Airlines Group
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does International Consolidated Airlines Group fit our criteria?
The company currently pays out 20.20% 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 higher payout ratio of 30.21%, leading to a dividend yield of around 4.69%. However, EPS is forecasted to fall to €1.31 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view International Consolidated Airlines Group as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, International Consolidated Airlines Group produces a yield of 3.69%, which is high for Airlines stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then International Consolidated Airlines Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for IAG’s future growth? Take a look at our free research report of analyst consensus for IAG’s outlook.
Valuation: What is IAG 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 IAG is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
