Investcorp Capital (ADX:ICAP) Has Announced A Dividend Of $0.094

The board of Investcorp Capital plc (ADX:ICAP) has announced that it will pay a dividend on the 12th of March, with investors receiving $0.094 per share. The dividend yield will be 9.5% based on this payment which is still above the industry average.

View our latest analysis for Investcorp Capital

Investcorp Capital's Projections Indicate Future Payments May Be Unsustainable

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Over the next year, EPS is forecast to expand by 52.0%. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

Investcorp Capital Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth Potential Is Shaky

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. EPS has fallen 23% over the last 12 months. A one off decline isn't a massive problem, but if it continues it could start to cause larger issues. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

We're Not Big Fans Of Investcorp Capital's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Investcorp Capital make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good income stock.

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 Investcorp Capital that investors should know about before committing capital to this stock. Is Investcorp Capital not quite the opportunity you were looking for? Why not check out our selection of top 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.