International Game Technology PLC (NYSE:IGT) investors will receive a payout of $0.20 per share on April 9th. Based on this payment, the company's stock has a dividend yield of 3.9%, an attractive boost to shareholder returns.

Check out our latest analysis on International Gaming Technology.

International Game Technology payments cover guaranteed returns

Even if you can maintain a high dividend yield for several years, it doesn't mean much if you can't maintain it. Prior to this announcement, International Game Technology's dividends were higher than its profit, but its free cash flow more than covered it. Generally, we think cash is more important than accounting profit metrics, and as cash flow easily covers the dividend, we don't think we need to worry too much about it.

Next year, EPS is expected to grow by 121.8%. Assuming the dividend continues in line with recent trends, we would expect the payout ratio to be 44%, which is in a fairly comfortable range.

NYSE:IGT Historic Dividend March 16, 2024

International Game Technology's dividend has been inconsistent.

It's reassuring to see International Game Technology has been paying a dividend for a number of years, but it's been cut at least once in that time. This makes us a little more cautious about dividend consistency across the economic cycle. There has been no significant change in dividends over the past nine years. While a modest increase in dividends is a good thing, we think this will be offset by historic payout reductions. If a company's earnings are not stable, it will be difficult to live off dividend income alone.

International Game Technology's dividend may lack growth

With a relatively unstable dividend, it's even more important to see if earnings per share are growing. International Game Technology has seen its EPS grow at 37% per year over the last five years. Although earnings per share have been growing steadily, International Game Technology is paying out 103% of its profit as dividends, which seems unsustainable absent extenuating circumstances.

In summary

Overall, it's great to see stable dividend payments, but we think the current payout levels may become unsustainable in the long term. Payouts have been erratic in the past, but if the company generates enough cash to cover them, the dividend could be solid in the short term. You'll probably look elsewhere for more profitable investments.

Market movements prove how highly valued a consistent dividend policy is compared to a more unpredictable dividend policy. However, there are other things investors should consider when analyzing stock performance. For example, we identified 3 warning signs for international gaming technology (1 should not be ignored!) Here's what you need to know before investing.Is International Game Technology the opportunity you've been looking for? Why not check it out? Selection of high dividend stocks.

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

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