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Cognizant Technology Solutions Corporation (NASDAQ:CTSH) looks like a blue chip stock, but it's about to ex-dividend

readers who wish to purchase Cognizant Technology Solutions Corporation (NASDAQ:CTSH) should start moving on its dividend soon as the ex-dividend is imminent. 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 an important date to watch as stock purchases made after this date may represent late settlements that do not appear on the record date. 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’ current share price of $69.78 has a trailing yield of 1.5%. Dividends are an important source of income for many shareholders, but business health is essential to sustaining those dividends. As a result, readers should always check to see if Cognizant Technology Solutions has been able to increase dividends or if dividends may be reduced.

See the latest analysis from Cognizant Technology Solutions

Dividends are usually paid out of company profits. Dividends can become unsustainable if companies pay out more dividends than they earn. Cognizant Technology Solutions pays only 24% of after-tax profits. This is comfortably low, leaving plenty of headroom in case adverse events occur. That said, even profitable companies may not generate enough cash to pay dividends, so you should always check to see if your dividends are covered by your cash flow. It paid out 23% of free cash flow in dividends last year, which is conservatively low.

I am positive that Cognizant Technology Solutions’ dividend is being funded by both earnings and cash flow. This usually indicates that the dividend is sustainable, and lower payout rates usually suggest a larger margin of safety before the dividend is cut.

Click here to see the company’s payout percentages and analyst predictions for future dividends.

past dividends

Are profits and dividends growing?

Stocks in companies that produce sustained earnings growth often have the best dividend prospects, as it makes it easier to raise dividends when earnings are rising. 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. The company has been able to grow profits rapidly while reinvesting most of its profits back into the business. This makes it easier for us to fund our future growth initiatives, which we believe is an attractive combination. Moreover, the dividend can always be increased later.

Another important way to measure a company’s dividend outlook is to measure 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.

Conclusion

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.

With that in mind, Cognizant Technology Solutions has an attractive dividend, but it’s worth knowing the risks associated with this stock.Every business has risks and we found it One Warning Sign from Cognizant Technology Solutions you should know about

If you are in a market of strong dividend payers, we recommend Check out our selection of top dividend stocks.

Do you have feedback on this article? What interests you? contact directly with us. Or send an email to our editorial team (at) Simplywallst.com.

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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