iEnergizer (LON:IBPO) Is Due To Pay A Dividend Of UK£0.084

The board of iEnergizer Limited ( LON:IBPO ) has announced that it will pay a dividend on the 30th of July, with investors receiving UK£0.084 per share. The dividend yield will be 4.7% based on this payment which is still above the industry average.

Check out our latest analysis for iEnergizer

iEnergizer Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last payment made up 76% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

EPS is set to grow by 22.0% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 202%, which is a bit high and could start applying pressure to the balance sheet.

iEnergizer's Dividend Has Lacked Consistency

It's comforting to see that iEnergizer 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 US$0.13 in 2012 to the most recent annual payment of US$0.20. This works out to be a compound annual growth rate (CAGR) of approximately 5.1% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Dividend Growth Could Be Constrained

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. iEnergizer has seen EPS rising for the last five years, at 22% per annum. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why iEnergizer is not retaining those earnings to reinvest in growth.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about iEnergizer's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for iEnergizer that investors should take into consideration. We have also put together a list of global stocks with a solid dividend.

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