Invicta Holdings (JSE:IVT) Has Announced That It Will Be Increasing Its Dividend To ZAR1.00

The board of Invicta Holdings Limited (JSE:IVT) has announced that it will be increasing its dividend by 11% on the 7th of August to ZAR1.00, up from last year's comparable payment of ZAR0.90. Even though the dividend went up, the yield is still quite low at only 3.1%.

View our latest analysis for Invicta Holdings

Invicta Holdings' Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Invicta Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 48.5% over the next 12 months. If the dividend continues on this path, the payout ratio could be 10.0% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ZAR2.54 in 2013, and the most recent fiscal year payment was ZAR0.90. This works out to be a decline of approximately 9.9% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. It's encouraging to see that Invicta Holdings has been growing its earnings per share at 48% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Invicta Holdings' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in Invicta Holdings stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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