IG Group Holdings (LON:IGG) Is Increasing Its Dividend To £0.3334

The board of IG Group Holdings plc (LON:IGG) has announced that the dividend on 16th of October will be increased to £0.3334, which will be 2.1% higher than last year's payment of £0.326 which covered the same period. This takes the dividend yield to 4.2%, which shareholders will be pleased with.

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IG Group Holdings' Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, IG Group Holdings' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 17.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 39% by next year, which is in a pretty sustainable range.

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IG Group Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was £0.282 in 2015, and the most recent fiscal year payment was £0.472. This works out to be a compound annual growth rate (CAGR) of approximately 5.3% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. IG Group Holdings has impressed us by growing EPS at 11% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like IG Group Holdings' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 7 IG Group Holdings analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is IG Group Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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