Stock Analysis

International General Insurance Holdings (NASDAQ:IGIC) Has Announced That Its Dividend Will Be Reduced To $0.01

  •  Updated
NasdaqCM:IGIC
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International General Insurance Holdings Ltd. (NASDAQ:IGIC) is reducing its dividend from last year's comparable payment to $0.01 on the 20th of September. The dividend yield of 3.4% is still a nice boost to shareholder returns, despite the cut.

See our latest analysis for International General Insurance Holdings

International General Insurance Holdings' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, International General Insurance Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 0.4% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 27%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

historic-dividend
NasdaqCM:IGIC Historic Dividend August 23rd 2022

International General Insurance Holdings' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from an annual total of $0.18 in 2020 to the most recent total annual payment of $0.26. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that International General Insurance Holdings has been growing its earnings per share at 40% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like International General Insurance Holdings' Dividend

Overall, we think that International General Insurance Holdings could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 identified 3 warning signs for International General Insurance Holdings (1 is a bit unpleasant!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

What are the risks and opportunities for International General Insurance Holdings?

International General Insurance Holdings Ltd.

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Rewards

  • Price-To-Earnings ratio (6x) is below the US market (14.7x)

  • Revenue is forecast to grow 17.51% per year

  • Earnings grew by 82% over the past year

Risks

  • Earnings are forecast to decline by an average of 2% per year for the next 3 years

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About NasdaqCM:IGIC

International General Insurance Holdings

International General Insurance Holdings Ltd.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth1
Past Performance5
Financial Health5
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Solid track record with excellent balance sheet.