Iridium Communications (NASDAQ:IRDM) Has Announced A Dividend Of $0.15
The board of Iridium Communications Inc. (NASDAQ:IRDM) has announced that it will pay a dividend on the 31st of December, with investors receiving $0.15 per share. This payment means the dividend yield will be 3.4%, which is below the average for the industry.
Iridium Communications' Payment Could Potentially Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Iridium Communications was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow by 43.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.
View our latest analysis for Iridium Communications
Iridium Communications Is Still Building Its Track Record
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of $0.52 in 2022 to the most recent total annual payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Iridium Communications has impressed us by growing EPS at 80% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
We Really Like Iridium Communications' Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Iridium Communications that investors should take into consideration. Is Iridium Communications not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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