Global Indemnity Group (NYSE:GBLI) Has Affirmed Its Dividend Of $0.25

The board of Global Indemnity Group, LLC (NYSE:GBLI) has announced that it will pay a dividend of $0.25 per share on the 30th of June. The dividend yield will be 3.0% based on this payment which is still above the industry average.

See our latest analysis for Global Indemnity Group

Global Indemnity Group's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Global Indemnity Group's dividend made up quite a large proportion of earnings but only 15% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 29%, which is in a comfortable range for us.

Global Indemnity Group Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The payments haven't really changed that much since 5 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Global Indemnity Group's Dividend Might Lack Growth

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Global Indemnity Group has been growing its earnings per share at 37% a year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Global Indemnity Group hasn't been doing.

Our Thoughts On Global Indemnity Group's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

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. For example, we've picked out 2 warning signs for Global Indemnity Group that investors should know about before committing capital to this stock. Is Global Indemnity Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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