April 11, 2025 a 06:46 am
CTSH: Dividend Analysis - Cognizant Technology Solutions Corporation
📊 Cognizant Technology Solutions Corporation presents a robust dividend profile with a modest yield of 1.36%. The company has demonstrated resilience, maintaining its dividend payments for 9 consecutive years without any cuts or suspensions. While the yield is relatively low, the long dividend history and company's financial health provide a degree of confidence for dividend investors.
Overview
Cognizant operates within the Information Technology sector, offering potential stability amidst market fluctuations. A current dividend per share of $1.21 USD marks its commitment to rewarding shareholders.
| Metric | Data |
|---|---|
| Sector | Information Technology |
| Dividend Yield | 1.36 % |
| Current Dividend per Share | 1.21 USD |
| Dividend History | 9 years |
| Last Cut or Suspension | None |
Dividend History
The dividend history of Cognizant Technology illustrates its consistent shareholder returns. By sustaining over 9 years of dividends, the company instills investor confidence through reliable income streams.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.31 |
| 2024 | 1.20 |
| 2023 | 1.16 |
| 2022 | 1.08 |
| 2021 | 0.96 |
Dividend Growth
The dividend growth over 3 and 5 years highlights modest increases, underlining Cognizant's steady fiscal integration into its shareholder value maximization strategy. Such growth indicates a reliable track for income investors seeking gradual wealth increments.
| Time | Growth |
|---|---|
| 3 years | 7.72 % |
| 5 years | 8.45 % |
The average dividend growth is 8.45 % over 5 years. This shows moderate but steady dividend growth.
Payout Ratio
Payout ratios are pivotal in assessing dividend sustainability. An EPS-based payout ratio of 26.73% and FCF-based ratio of 32.75% exhibit Cognizant’s prudence in balancing dividends with retained earnings, ensuring fiscal robustness.
| Key Figure | Ratio |
|---|---|
| EPS-based | 26.73 % |
| Free cash flow-based | 32.75 % |
The payout ratios indicate room for potential dividend increases, showcasing the company's capability to sustain its dividends comfortably.
Cashflow & Capital Efficiency
The following metrics determine operational proficiency and capital stewardship relative to cash flows. Insights drawn from these ratios aid in understanding the financial foundation supporting dividend payments.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 7.55% | 5.28% | 4.79% |
| Earnings Yield | 7.73% | 5.57% | 5.87% |
| CAPEX to Operating Cash Flow | 13.98% | 13.61% | 13.98% |
| Stock-based Compensation to Revenue | 0.89% | 0.91% | 0.89% |
| Free Cash Flow / Operating Cash Flow Ratio | 86.07% | 86.39% | 86.02% |
The company's cash generation and capital efficiency metrics confirm operational effectiveness, supporting executive decisions on dividend increases.
Balance Sheet & Leverage Analysis
An overview of the company's leverage and liquidity ratios reveals its financial stability, crucial for consistent dividend payment capabilities.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 12.46% | 9.94% | 10.27% |
| Debt-to-Assets | 8.59% | 7.11% | 7.41% |
| Debt-to-Capital | 11.08% | 9.04% | 9.31% |
| Net Debt to EBITDA | -18.23% | -39.02% | -21.25% |
| Current Ratio | 2.17 | 2.25 | 2.09 |
| Quick Ratio | 2.17 | 2.25 | 2.09 |
| Financial Leverage | 1.45 | 1.40 | 1.39 |
The balance sheet presents conservative leverage levels, ensuring dividend protection against financial uncertainties.
Fundamental Strength & Profitability
An effective indicator of the company’s operating performance and profitability, these ratios contrast relative efficiency and potential for high dividend payouts.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 18.60% | 16.07% | 15.55% |
| Return on Assets | 12.83% | 11.50% | 11.22% |
| Net Margin | 11.79% | 10.99% | 11.35% |
| EBIT Margin | 15.62% | 14.61% | 15.16% |
| EBITDA Margin | 18.55% | 17.29% | 17.91% |
| Gross Margin | 35.93% | 34.56% | 34.34% |
| R&D to Revenue | 0% | 0% | 0% |
Cognizant's stable profitability metrics signify effective operational leadership and capability to uphold dividends.
Price Development
Dividend Scoring System
| Criteria | Description | Score |
|---|---|---|
| Dividend yield | Market yield comparison | |
| Dividend Stability | Historical consistency | |
| Dividend growth | Increase over time | |
| Payout ratio | Prudent financial management | |
| Financial stability | Balance sheet strength | |
| Dividend continuity | Long-term sustainability | |
| Cashflow Coverage | Ability to cover dividends | |
| Balance Sheet Quality | Leverage and liquidity |
Total Score: 34/40
Rating
🗣️ Cognizant Technology Solutions Corporation offers a compelling value proposition within the dividend investment space, characterized by its solid financial metrics and consistent shareholder returns. While the dividend yield might not be among the highest, its stability and growth reflect a promising picture of continued income generation for investors. Overall, Cognizant earns a strong recommendation for income-focused portfolios seeking steady dividend appreciation.