IntegraFin Holdings (LON:IHP) Will Pay A Dividend Of £0.07

The board of IntegraFin Holdings plc (LON:IHP) has announced that it will pay a dividend of £0.07 per share on the 26th of January. Based on this payment, the dividend yield will be 3.5%, which is fairly typical for the industry.

View our latest analysis for IntegraFin Holdings

IntegraFin Holdings' Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, IntegraFin Holdings' dividend was only 68% of earnings, however it was paying out 510% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Over the next year, EPS is forecast to expand by 17.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 61% by next year, which is in a pretty sustainable range.

IntegraFin Holdings' Dividend Has Lacked Consistency

It's comforting to see that IntegraFin Holdings has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of £0.064 in 2018 to the most recent total annual payment of £0.102. This means that it has been growing its distributions at 9.8% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

IntegraFin Holdings Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. IntegraFin Holdings has seen EPS rising for the last five years, at 8.7% per annum. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On IntegraFin Holdings' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about IntegraFin Holdings' payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for IntegraFin Holdings that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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