Here is the IAG dividend forecast until 2026

Shares owned by British Airways International Consolidated Airlines Group (LSE: IAG) has grown this year, boosted by strong trading and the company's decision to restart dividend payments.

Demand for transatlantic flights and capacity constraints in the industry have helped IAG rebuild its profits and pay off debt faster than expected. Shareholders are set to reap the rewards, and some attractive cash payments are expected over the next few years.

Here are the latest consensus forecasts from City analysts for IAG shares:

Of course, it is important to remember that forecasts are uncertain and subject to change. IAG's shares are also denominated in euros, so they can be affected by exchange rate risk. However, based on what we know today, it seems that the airline's profits could rise to around 4% next year. That is more than now FTSE 100 average yield of 3.6%.

Here's my take on the UK's biggest airline business.

A good start

IAG looks in good shape to me at the moment. In its half-year results, CEO Luis Gallego reported “a strong need to travel”especially on the group's main transatlantic routes to the US and Latin America.

The profit was certainly strong. The group made an operating profit of 11.5% during the 12 months to 30 June. That doubles the 5.9% earned EasyJet at the same time, for example.

This improved profitability helped IAG repay the loan. Total debt fell by a third to €6.4bn during the first half of the year. That seems a comfortable rate to me, based on this year's forecast of €2.5bn in profits.

Should I buy IAG shares today?

I have been impressed with IAG's progress over the past few years. But I can see a few clouds on the horizon. Airlines around the world are struggling to find new aircraft and parts for existing aircraft.

British Airways has recently admitted it plans to cancel hundreds of long-haul flights this winter due to shortages “engines and parts”. Scarcity has a lot to do with Rolls-Royce engines installed in the airline Boeing 787 flights.

Even before this news, British Airways was already struggling to meet deadlines. A Financial Times a report in October suggested cancellations and delays on BA flights from Heathrow had doubled since the pandemic – worse than many other airlines.

I suspect that passengers flock to British Airways because they have nothing to do. The airline is one of the biggest users on the London-US route, and many corporate travelers will automatically use it.

Investors looking for reliable dividends may want to keep in mind IAG's poor track record in this regard. The company has only made payments in six of the 13 years since it was listed in 2011.

Retailer forecasts suggest that income growth will continue through 2025, but at a slower rate of 7%. On balance, I struggle to get excited about the idea of ​​buying IAG shares for dividends so I feel I have better income options elsewhere.