looks like Cognizant Technology Solutions Corporation (NASDAQ:CTSH) will go ex-dividend within the next 3 days. The ex-dividend date is usually one business day before the record date, which is the date on which the company determines which shareholders are eligible to receive dividends. The ex-dividend date is important because whenever a stock is bought or sold, it takes at least two business days for the trade to settle. This means that an investor who purchased Cognizant Technology Solutions shares after August 18th will not receive the dividend paid on August 30th.
The company’s next dividend payment will be $0.27 per share. Last year, the company distributed a total of his US$1.08 to its shareholders. Based on last year’s payments, Cognizant Technology Solutions stock has a trailing yield of approximately 1.5% to the current share price of $69.78. Dividends are an important source of income for many shareholders, but business health is essential to sustaining those dividends. Therefore, it is necessary to investigate whether Cognizant Technology Solutions can afford to pay dividends and whether dividends may increase.
See the latest analysis from Cognizant Technology Solutions
Paying more dividends than a company earns can make dividends unsustainable. Not an ideal situation. Cognizant Technology Solutions paid just 24% of its profits last year, which we believe is low to say the least and leaves enough margin for unforeseen circumstances. A useful secondary check is to assess whether Cognizant Technology Solutions has generated sufficient free cash flow to pay dividends. The good news is that we only paid 23% of free cash flow last year.
It’s encouraging that the dividend is covered by both earnings and cash flow. This generally suggests that dividends are sustainable as long as profits don’t fall precipitously.
Click here to see the company’s payout percentages and analyst predictions for future dividends.
Are profits and dividends growing?
Companies with better growth prospects are usually the best dividend payers, as they are more likely to increase their dividends if earnings per share are improving. If earnings drop significantly, the company could be forced to cut its dividend. For this reason, we are pleased to report that Cognizant Technology Solutions’ earnings per share have grown 11% annually over the past five years. Earnings per share are growing rapidly, and the company keeps more than half of its profits in the business. This attractive combination could suggest the company is focusing on reinvesting to further grow its earnings. Fast-growing companies that reinvest heavily are attractive from a dividend perspective. Especially since you can often increase the payout percentage later on.
The primary way most investors assess a company’s dividend outlook is by checking historical dividend growth. Five years before he started the data, Cognizant Technology Solutions has averaged about a 12% annual payout. It’s great to see that earnings per share have grown rapidly over the years and the dividend per share has gone up with it.
In summary
Is Cognizant Technology Solutions an attractive dividend stock or should it be kept on the shelf? Cognizant Technology Solutions is growing profits rapidly, has conservatively low payouts, and has heavily reinvested in its business. indicates that Stirling combination. Cognizant Technology Solutions looks solid throughout this analysis.
So while Cognizant Technology Solutions looks good from a dividend standpoint, it’s always worth staying informed about the risks associated with this stock.To help with this, we have discovered One Warning Sign from Cognizant Technology Solutions What you should know before investing in stocks.
If you are in a market of strong dividend payers, we recommend Check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price sensitive company announcements or qualitative materials. Is not …
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