Assessing the Upcoming Dividend and Financial Health of Cognizant Technology Solutions Corp
Cognizant Technology Solutions Corp (CTSH, Financial) recently announced a dividend of $0.3 per share, payable on 2024-02-28, with the ex-dividend date set for 2024-02-16. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Cognizant Technology Solutions Corps dividend performance and assess its sustainability.
What Does Cognizant Technology Solutions Corp Do?
Cognizant is a global IT services provider, offering consulting and outsourcing services to some of the world's largest enterprises spanning the financial services, media and communications, healthcare, natural resources, and consumer products industries. Cognizant employs nearly 300,000 people globally, roughly 70% of whom are in India, although the company's headquarters are in Teaneck, New Jersey.
A Glimpse at Cognizant Technology Solutions Corp's Dividend History
Cognizant Technology Solutions Corp has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Cognizant Technology Solutions Corp's Dividend Yield and Growth
As of today, Cognizant Technology Solutions Corp currently has a 12-month trailing dividend yield of 1.53% and a 12-month forward dividend yield of 1.58%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Cognizant Technology Solutions Corp's annual dividend growth rate was 9.60%. Extended to a five-year horizon, this rate decreased to 8.50% per year. Based on Cognizant Technology Solutions Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Cognizant Technology Solutions Corp stock as of today is approximately 2.30%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Cognizant Technology Solutions Corp's dividend payout ratio is 0.25.
Cognizant Technology Solutions Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cognizant Technology Solutions Corp's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Cognizant Technology Solutions Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Cognizant Technology Solutions Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cognizant Technology Solutions Corp's revenue has increased by approximately 7.60% per year on average, a rate that underperforms than approximately 52.29% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Cognizant Technology Solutions Corp's earnings increased by approximately 10.00% per year on average, a rate that underperforms than approximately 50.15% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.30%, which underperforms than approximately 72.38% of global competitors.
Next Steps
Investors considering the addition of Cognizant Technology Solutions Corp to their portfolios should weigh the company's consistent dividend payments, robust dividend growth rate, and moderate payout ratio against its profitability and growth metrics. While the growth in certain metrics may lag behind some global competitors, the company's strong profitability rank and dividend history suggest a reliable income stream for dividend-focused investors. As the tech sector continues to evolve, keeping an eye on Cognizant's strategic initiatives and market position will be key to understanding its long-term dividend prospects.
For those interested in further exploring high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener to identify potential investments that align with their portfolio strategies.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
