Shares of InterContinental Hotels Group PLC (LON:IHG) will begin trading ex-dividend in 2 days. To qualify for the dividend check of US$0.36 per share, investors must have owned the shares prior to 30 August 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income a persuasive enough catalyst for investors to think about InterContinental Hotels Group as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How does InterContinental Hotels Group fare?
InterContinental Hotels Group has a trailing twelve-month payout ratio of 35.3%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 42.3%, leading to a dividend yield of 2.2%. However, EPS is forecasted to fall to $2.96 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although IHG’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, InterContinental Hotels Group has a yield of 1.5%, which is on the low-side for Hospitality stocks.
If you are building an income portfolio, then InterContinental Hotels Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for IHG’s future growth? Take a look at our free research report of analyst consensus for IHG’s outlook.
- Valuation: What is IHG 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 IHG is currently mispriced by the market.
- 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.