Why You Might Be Interested In General Insurance Corporation of India (NSE:GICRE) For Its Upcoming Dividend

General Insurance Corporation of India (NSE:GICRE) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase General Insurance Corporation of India's shares on or after the 11th of September, you won't be eligible to receive the dividend, when it is paid on the 26th of October.

The company's upcoming dividend is ₹10.00 a share, following on from the last 12 months, when the company distributed a total of ₹10.00 per share to shareholders. Based on the last year's worth of payments, General Insurance Corporation of India stock has a trailing yield of around 2.6% on the current share price of ₹383.45. If you buy this business for its dividend, you should have an idea of whether General Insurance Corporation of India's dividend is reliable and sustainable. As a result, readers should always check whether General Insurance Corporation of India has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for General Insurance Corporation of India

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. General Insurance Corporation of India paid out a comfortable 26% of its profit last year.

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.

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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see General Insurance Corporation of India has grown its earnings rapidly, up 21% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past six years, General Insurance Corporation of India has increased its dividend at approximately 6.8% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is General Insurance Corporation of India worth buying for its dividend? Companies like General Insurance Corporation of India that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating General Insurance Corporation of India more closely.

In light of that, while General Insurance Corporation of India has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for General Insurance Corporation of India (1 makes us a bit uncomfortable!) that you ought to be aware of before buying the 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.

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