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Is It Worth Considering ICICI Prudential Life Insurance Company Limited (NSE:ICICIPRULI) For Its Upcoming Dividend?

Simply Wall St

ICICI Prudential Life Insurance Company Limited (NSE:ICICIPRULI) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 31st of October in order to receive the dividend, which the company will pay on the 21st of November.

ICICI Prudential Life Insurance's next dividend payment will be ₹0.8 per share. Last year, in total, the company distributed ₹1.6 to shareholders. Calculating the last year's worth of payments shows that ICICI Prudential Life Insurance has a trailing yield of 0.3% on the current share price of ₹483.9. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for ICICI Prudential Life 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 Prudential Life Insurance paid out a comfortable 26% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

NSEI:ICICIPRULI Historical Dividend Yield, October 27th 2019

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see ICICI Prudential Life Insurance's earnings per share have been shrinking at 3.7% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. ICICI Prudential Life Insurance's dividend payments per share have declined at 42% per year on average over the past three years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

The Bottom Line

Is ICICI Prudential Life Insurance worth buying for its dividend? ICICI Prudential Life Insurance's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think there are likely better opportunities out there.

Wondering what the future holds for ICICI Prudential Life Insurance? See what the 23 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.