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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. IVE Group Limited (ASX:IGL) has returned to shareholders over the past 2 years, an average dividend yield of 6.00% annually. Does IVE Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for IVE Group
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it paying an annual yield above 75% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share risen in the past couple of years?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it have the ability to keep paying its dividends going forward?
Does IVE Group pass our checks?
The company currently pays out 82.63% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 67.36%, leading to a dividend yield of around 8.27%. However, EPS should increase to A$0.23, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view IVE Group as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, IVE Group produces a yield of 7.27%, which is high for Media stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank IVE Group as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three fundamental aspects you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for IGL’s future growth? Take a look at our free research report of analyst consensus for IGL’s outlook.
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Valuation: What is IGL worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether IGL is currently mispriced by the market.
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Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.