ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Readers hoping to buy ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase ICICI Lombard General Insurance's shares on or after the 23rd of October, you won't be eligible to receive the dividend, when it is paid on the 12th of November.
The company's upcoming dividend is ₹7.00 a share, following on from the last 12 months, when the company distributed a total of ₹13.50 per share to shareholders. Looking at the last 12 months of distributions, ICICI Lombard General Insurance has a trailing yield of approximately 0.8% on its current stock price of ₹1650.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether ICICI Lombard General Insurance can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see ICICI Lombard General Insurance paying out a modest 40% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
See our latest analysis for ICICI Lombard General Insurance
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at ICICI Lombard General Insurance, with earnings per share up 9.5% on average over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. ICICI Lombard General Insurance has delivered 28% dividend growth per year on average over the past nine years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Is ICICI Lombard General Insurance an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. ICICI Lombard General Insurance ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
On that note, you'll want to research what risks ICICI Lombard General Insurance is facing. To help with this, we've discovered 1 warning sign for ICICI Lombard General Insurance that you should be aware of before investing in their shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.