ICICI Lombard General Insurance (NSE:ICICIGI) Is Due To Pay A Dividend Of ₹6.50

ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) has announced that it will pay a dividend of ₹6.50 per share on the 12th of November. This will take the dividend yield to an attractive 0.6%, providing a nice boost to shareholder returns.

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ICICI Lombard General Insurance's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, ICICI Lombard General Insurance was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 47.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 19% by next year, which is in a pretty sustainable range.

View our latest analysis for ICICI Lombard General Insurance

ICICI Lombard General Insurance's Dividend Has Lacked Consistency

It's comforting to see that ICICI Lombard General Insurance has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2017, the dividend has gone from ₹1.50 total annually to ₹12.50. This implies that the company grew its distributions at a yearly rate of about 30% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. ICICI Lombard General Insurance has seen EPS rising for the last five years, at 13% per annum. ICICI Lombard General Insurance definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like ICICI Lombard General Insurance's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for ICICI Lombard General Insurance that investors need to be conscious of moving forward. Is ICICI Lombard General Insurance not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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