Invesco (NYSE:IVZ) Has Announced A Dividend Of $0.205

Invesco Ltd.'s (NYSE:IVZ) investors are due to receive a payment of $0.205 per share on 4th of September. This makes the dividend yield 4.8%, which is above the industry average.

View our latest analysis for Invesco

Invesco Is Paying Out More Than It Is Earning

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. While Invesco is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. This gives us some comfort about the level of the dividend payments.

The next 12 months is set to see EPS grow by 130.3%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.

Invesco Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.90 in 2014, and the most recent fiscal year payment was $0.82. Payments have been decreasing at a very slow pace in this time period. A company that decreases its dividend over time generally isn't what we are looking for.

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. Invesco's EPS has fallen by approximately 16% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

Our Thoughts On Invesco's Dividend

Overall, we always like to see the dividend being raised, but we don't think Invesco will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Invesco that investors should take into consideration. Is Invesco not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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