Is It Smart To Buy ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) Before It Goes Ex-Dividend?

It looks like ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) is about to go ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Meaning, you will need to purchase ICICI Lombard General Insurance's shares before the 28th of October to receive the dividend, which will be paid on the 16th of November.

The company's next dividend payment will be ₹5.50 per share. Last year, in total, the company distributed ₹11.00 to shareholders. Calculating the last year's worth of payments shows that ICICI Lombard General Insurance has a trailing yield of 0.6% on the current share price of ₹1958.95. If you buy this business for its dividend, you should have an idea of whether ICICI Lombard General Insurance's dividend is reliable and sustainable. So we need to investigate whether ICICI Lombard General Insurance can afford its dividend, and if the dividend could grow.

View our latest analysis for ICICI Lombard General Insurance

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. ICICI Lombard General Insurance paid out a comfortable 25% of its profit last year.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, ICICI Lombard General Insurance's earnings per share have been growing at 14% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, seven years ago, ICICI Lombard General Insurance has lifted its dividend by approximately 33% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is ICICI Lombard General Insurance an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, ICICI Lombard General Insurance appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while ICICI Lombard General Insurance has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 2 warning signs with ICICI Lombard General Insurance and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.