An analysis of the company's dividend history, growth, and payout ratio
IG Group Holdings PLC (IGGRF, Financial) recently announced a dividend of $0.32 per share, payable on 2023-10-19, with the ex-dividend date set for 2023-09-21. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into IG Group Holdings PLCs dividend performance and assess its sustainability.
About IG Group Holdings PLC
IG Group Holdings PLC provides online trading services to its clients. The majority of the company's revenue stems from its derivative products and contracts for difference (CFDs). The company operates through various segments which are The U.K. segment which derives its revenue from financial spread bets, CFDs, binary options, and execution-only stockbroking. The Australian segment derives its revenue from CFDs and binary options. The European segment derives its revenue from CFDs, binary options, and execution-only stockbroking. The Rest of the World segment derives its revenue from the operation of a regulated futures and options exchange as well as CFDs and binary options. The company generates more than half of its revenue from the U.K., followed by Europe and Australia.
A Look at IG Group Holdings PLC's Dividend History
IG Group Holdings PLC has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
IG Group Holdings PLC's Dividend Yield and Growth
As of today, IG Group Holdings PLC currently has a 12-month trailing dividend yield of 5.79% and a 12-month forward dividend yield of 6.55%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, IG Group Holdings PLC's annual dividend growth rate was 1.00%. Extended to a five-year horizon, this rate increased to 3.90% per year. And over the past decade, IG Group Holdings PLC's annual dividends per share growth rate stands at 7.60%.
Based on IG Group Holdings PLC's dividend yield and five-year growth rate, the 5-year yield on cost of IG Group Holdings PLC stock as of today is approximately 7.01%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-05-31, IG Group Holdings PLC's dividend payout ratio is 0.52.
IG Group Holdings PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks IG Group Holdings PLC's profitability 9 out of 10 as of 2023-05-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Future Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. IG Group Holdings PLC's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and IG Group Holdings PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. IG Group Holdings PLC's revenue has increased by approximately 8.20% per year on average, a rate that outperforms than approximately 52.27% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, IG Group Holdings PLC's earnings increased by approximately 9.90% per year on average, a rate that outperforms than approximately 46.84% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 13.50%, outperforms than approximately 52.86% of global competitors.
Conclusion
Considering IG Group Holdings PLC's consistent dividend payments, solid dividend growth rate, reasonable payout ratio, high profitability, and robust growth metrics, it appears to be a promising choice for dividend investors. However, as with any investment, further research is recommended before making any decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
