The Dynamic Dividend

Ebix Initiates Quarterly Dividend; Yields 1%

Ebix (EBIX) declared a quarterly dividend of $0.04 per share this morning, a first for the provider of software and e-commerce solutions to the insurance industry.

Analysts currently expect Ebix to earn $1.62 per share in 2012, giving the company a paltry forward payout ratio of just under 10% to begin its dividend-paying era. Ebix also has a cash hoard ($0.68 per share) capable of funding its new dividend rate for 17 quarters, making this one of the safer dividend initiations in recent memory.

The company’s CEO said despite paying a dividend, they still see themselves “as primarily a growth stock and thus intend to invest 90% of our cash towards growth initiatives and share repurchases.”

So while this payout is very safe, it’s not a “starter” rate that will automatically be given a larger piece of the earnings pie over time. It’s slotted for 10% of earnings, which is what its already getting. Future dividend growth will depend almost exclusively on EPS expansion, though share repurchases will bolster that.

Shares of EBIX opened today’s session trading at $15.90, where they now carry a shiny new 1.01% yield.