Cognizant Technology Solutions Boosts Dividend to $0.31: What Investors Need to Know

Cognizant Technology Solutions Corporation (NASDAQ:CTSH) announced a dividend increase to $0.31, effective February 26th. Although this is a positive move, the dividend yield stands at just 1.4%. This is a slight gain for shareholders.

It’s encouraging to see a dividend raise, but it’s also important to consider if this increase is sustainable. Cognizant has shown it can easily cover its dividends, meaning it’s investing much of its profits back into growth.

Over the next year, it’s projected that earnings per share (EPS) will grow by 31.1%. If the dividend follows recent patterns, the payout ratio may settle around 23%, which is considered healthy.

Cognizant has built a solid record with its dividends over the past eight years. Since 2017, the annual payment has grown from $0.60 to $1.24, averaging a growth rate of 9.5% each year. However, a longer history would give us more confidence.

For investors, it’s reassuring to see consistent dividend payments. Over the last five years, Cognizant’s EPS has risen by 6.5%. Given this upward trend and a low payout ratio, there’s potential for future dividend growth.

In summary, it’s good to see the dividend increase in a sustainable way. While the payout ratios look promising, the company’s overall dividend history leaves us a bit cautious. It’s a decent dividend, but it’s wise to remain watchful.

Investors value consistent dividends over unpredictable payments. Remember to consider other factors before investing in stocks. Companies that grow their earnings usually make the best dividend choices over time.

This article summarizes general insights. We base our commentary on historical data and analyst forecasts. It’s not investment advice and doesn’t consider individual financial situations. We focus on long-term analysis based on fundamental data. Please note that our analysis may not include the latest market-sensitive announcements. Simply Wall St does not hold stocks mentioned in this article.