ICICI Lombard General Insurance (NSE:ICICIGI) Is Increasing Its Dividend To ₹5.00

The board of ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) has announced that the dividend on 17th of November will be increased to ₹5.00, which will be 11% higher than last year's payment of ₹4.50 which covered the same period. This takes the dividend yield to 0.7%, which shareholders will be pleased with.

Check out our latest analysis for ICICI Lombard General Insurance

ICICI Lombard General Insurance's Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, ICICI Lombard General Insurance's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 75.3%. 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.

ICICI Lombard General Insurance's Dividend Has Lacked Consistency

ICICI Lombard General Insurance has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of ₹1.50 in 2017 to the most recent total annual payment of ₹10.00. This implies that the company grew its distributions at a yearly rate of about 37% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. ICICI Lombard General Insurance has impressed us by growing EPS at 9.6% per year over the past five years. 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

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for ICICI Lombard General Insurance that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.