ICICI Lombard General Insurance's (NSE:ICICIGI) Dividend Will Be ₹5.50

ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) has announced that it will pay a dividend of ₹5.50 per share on the 16th of November. This makes the dividend yield 0.5%, which is above the industry average.

Check out our latest analysis for ICICI Lombard General Insurance

ICICI Lombard General Insurance's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, ICICI Lombard General Insurance's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 68.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 18%, which is in the range that makes us comfortable with the sustainability of the dividend.

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. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2017, the annual payment back then was ₹1.50, compared to the most recent full-year payment of ₹11.00. This works out to be a compound annual growth rate (CAGR) of approximately 33% a year over that time. 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. ICICI Lombard General Insurance has impressed us by growing EPS at 14% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

ICICI Lombard General Insurance Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that ICICI Lombard General Insurance is a strong income stock thanks to its track record and growing earnings. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for ICICI Lombard General Insurance that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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