Investec Group's (JSE:INL) Dividend Will Be £3.96

The board of Investec Group (JSE:INL) has announced that it will pay a dividend on the 30th of December, with investors receiving £3.96 per share. This makes the dividend yield about the same as the industry average at 6.7%.

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Investec Group's Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, Investec Group has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Investec Group's payout ratio of 50% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 25.8%. Analysts forecast the future payout ratio could be 45% over the same time horizon, which is a number we think the company can maintain.

Check out our latest analysis for Investec Group

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was £0.186, compared to the most recent full-year payment of £0.356. This implies that the company grew its distributions at a yearly rate of about 6.7% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Investec Group has seen EPS rising for the last five years, at 57% per annum. Investec Group is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Our Thoughts On Investec Group's Dividend

Overall, we always like to see the dividend being raised, but we don't think Investec Group will make a great income stock. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.

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 Investec Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.