It seems to be like Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is about to go ex-dividend within the subsequent 4 days. The ex-dividend date is one enterprise day earlier than an organization’s file date, which is the date on which the corporate determines which shareholders are entitled to obtain a dividend. The ex-dividend date is a vital date to concentrate on as any buy of the inventory made on or after this date would possibly imply a late settlement that does not present on the file date. This implies that buyers who buy Cognizant Technology Solutions’ shares on or after the 18th of August won’t obtain the dividend, which shall be paid on the twenty ninth of August.

The firm’s subsequent dividend cost shall be US$0.29 per share, and within the final 12 months, the corporate paid a complete of US$1.16 per share. Based on the final 12 months’s price of funds, Cognizant Technology Solutions has a trailing yield of 1.7% on the present inventory worth of $70.08. Dividends are an essential supply of earnings to many shareholders, however the well being of the enterprise is essential to sustaining these dividends. As a end result, readers ought to all the time examine whether or not Cognizant Technology Solutions has been in a position to develop its dividends, or if the dividend is perhaps lower.

View our latest analysis for Cognizant Technology Solutions

Dividends are sometimes paid out of firm earnings, so if an organization pays out greater than it earned, its dividend is normally at a better danger of being lower. Fortunately Cognizant Technology Solutions’s payout ratio is modest, at simply 27% of revenue. Yet money move is usually extra essential than revenue for assessing dividend sustainability, so we should always all the time examine if the corporate generated sufficient money to afford its dividend. It distributed 27% of its free money move as dividends, a cushty payout stage for many corporations.

It’s encouraging to see that the dividend is roofed by each revenue and money move. This usually suggests the dividend is sustainable, so long as earnings do not drop precipitously.

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

Have Earnings And Dividends Been Growing?

Companies with persistently rising earnings per share usually make the most effective dividend shares, as they normally discover it simpler to develop dividends per share. Investors love dividends, so if earnings fall and the dividend is lowered, anticipate a inventory to be bought off closely on the similar time. Fortunately for readers, Cognizant Technology Solutions’s earnings per share have been rising at 11% a 12 months for the previous 5 years. The firm has managed to develop earnings at a speedy charge, whereas reinvesting a lot of the earnings throughout the enterprise. This will make it simpler to fund future development efforts and we predict that is a beautiful mixture – plus the dividend can all the time be elevated later.

Many buyers will assess an organization’s dividend efficiency by evaluating how a lot the dividend funds have modified over time. In the previous six years, Cognizant Technology Solutions has elevated its dividend at roughly 12% a 12 months on common. It’s nice to see earnings per share rising quickly over a number of years, and dividends per share rising proper together with it.

To Sum It Up

From a dividend perspective, ought to buyers purchase or keep away from Cognizant Technology Solutions? We love that Cognizant Technology Solutions is rising earnings per share whereas concurrently paying out a low share of each its earnings and money move. These traits counsel the corporate is reinvesting in rising its enterprise, whereas the conservative payout ratio additionally implies a lowered danger of the dividend being lower sooner or later. It’s a promising mixture that ought to mark this firm worthy of nearer consideration.

With that in thoughts, a crucial a part of thorough inventory analysis is being conscious of any dangers that inventory presently faces. For instance, we have discovered 1 warning sign for Cognizant Technology Solutions that we suggest you contemplate earlier than investing within the enterprise.

Generally, we would not suggest simply shopping for the primary dividend inventory you see. Here’s a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is common in nature. We present commentary based mostly on historic knowledge and analyst forecasts solely utilizing an unbiased methodology and our articles will not be supposed to be monetary recommendation. It doesn’t represent a suggestion to purchase or promote any inventory, and doesn’t take account of your goals, or your monetary state of affairs. We intention to carry you long-term targeted evaluation pushed by elementary knowledge. Note that our evaluation might not issue within the newest price-sensitive firm bulletins or qualitative materials. Simply Wall St has no place in any shares talked about.