Stock Analysis

International General Insurance Holdings (NASDAQ:IGIC) Is Increasing Its Dividend To US$0.16

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NasdaqCM:IGIC
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The board of International General Insurance Holdings Ltd. (NASDAQ:IGIC) has announced that it will be increasing its dividend on the 7th of September to US$0.16. This takes the dividend yield from 3.4% to 3.5%, which shareholders will be pleased with.

View our latest analysis for International General Insurance Holdings

International General Insurance Holdings' Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, International General Insurance Holdings' earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to expand by 16.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
NasdaqCM:IGIC Historic Dividend August 16th 2021

International General Insurance Holdings Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that International General Insurance Holdings has grown earnings per share at 157% per year over the past three 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.

In Summary

Overall, we always like to see the dividend being raised, but we don't think International General Insurance Holdings will make a great income stock. While International General Insurance Holdings is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for International General Insurance Holdings that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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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 (6.3x) is below the US market (15.1x)

  • 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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International General Insurance Holdings

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