Investors Title (NASDAQ:ITIC) Has Affirmed Its Dividend Of $0.46

Investors Title Company's (NASDAQ:ITIC) investors are due to receive a payment of $0.46 per share on 29th of March. The dividend yield will be 3.7% based on this payment which is still above the industry average.

Check out our latest analysis for Investors Title

Investors Title's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Investors Title's dividend was only 16% of earnings, however it was paying out 1,290% of free cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Unless the company can turn things around, EPS could fall by 0.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 59%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the dividend has gone from $0.32 total annually to $5.84. This works out to be a compound annual growth rate (CAGR) of approximately 34% 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's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Investors Title's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Investors Title is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Investors Title that investors should know about before committing capital to this stock. Is Investors Title not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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