International Game Technology PLC (NYSE:IGT) Will Pay A US$0.20 Dividend In Four Days
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that International Game Technology PLC (NYSE:IGT) is about to go ex-dividend in just 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase International Game Technology's shares before the 25th of March in order to receive the dividend, which the company will pay on the 9th of April.
The company's upcoming dividend is US$0.20 a share, following on from the last 12 months, when the company distributed a total of US$0.80 per share to shareholders. Looking at the last 12 months of distributions, International Game Technology has a trailing yield of approximately 3.9% on its current stock price of US$20.74. 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! As a result, readers should always check whether International Game Technology has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for International Game Technology
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year International Game Technology paid out 103% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 25% of its free cash flow last year.
It's good to see that while International Game Technology's dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Very few companies are able to sustainably pay dividends larger than their reported earnings.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see International Game Technology has grown its earnings rapidly, up 37% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the International Game Technology dividends are largely the same as they were nine years ago.
Final Takeaway
From a dividend perspective, should investors buy or avoid International Game Technology? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why International Game Technology is paying out so much of its profit. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of International Game Technology's dividend merits.
In light of that, while International Game Technology has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 3 warning signs with International Game Technology (at least 1 which is potentially serious), and understanding them should be part of your investment process.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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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.
