HICL Infrastructure's (LON:HICL) Dividend Will Be Increased To £0.0208

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3 days ago

HICL Infrastructure PLC (LON:HICL) has announced that it will be increasing its periodic dividend on the 30th of September to £0.0208, which will be 1.0% higher than last year's comparable payment amount of £0.0206. This takes the dividend yield to 6.6%, which shareholders will be pleased with.
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Estimates Indicate HICL Infrastructure's Could Struggle to Maintain Dividend Payments In The Future
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, the company's dividend was much higher than its earnings. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.
If the company can't turn things around, EPS could fall by 2.9% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 366%, which is definitely a bit high to be sustainable going forward.
View our latest analysis for HICL Infrastructure
HICL Infrastructure Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of £0.0724 in 2015 to the most recent total annual payment of £0.0825. This works out to be a compound annual growth rate (CAGR) of approximately 1.3% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. HICL Infrastructure has seen earnings per share falling at 2.9% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.
HICL Infrastructure's Dividend Doesn't Look Sustainable
In summary, while it's always good to see the dividend being raised, we don't think HICL Infrastructure's payments are rock solid. Although they have been consistent in the past, we think the payments are a little high to be sustained. This company is not in the top tier of income providing stocks.
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. For example, we've picked out 2 warning signs for HICL Infrastructure 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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