The advice of Coforge Limited (NSE:COFORGE) announced that it will pay a dividend on June 11, with investors receiving ₹13.00 per share. Taking this payment into account, the dividend yield on the stock will be 1.4%, representing a modest increase in shareholder return.
See our latest analysis for Coforge
Coforge’s dividend is well covered by earnings
If predictable over a long period, even low dividend yields can be attractive. Based on the last payout, Coforge was earning comfortably enough to cover the dividend. This means that a large portion of his income is kept to grow the business.
Next year is expected to see EPS increase by 26.1%. If the dividend continues on this path, the payout ratio could be 46% by next year, which we believe can be quite sustainable in the future.
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the past 10 years. Since 2012, the dividend has increased from ₹7.50 to ₹52.00. This means that it has increased its distributions by 21% per year during this period. Dividends have grown rapidly over this period, but with cuts in the past, we’re not sure this stock will be a reliable source of income in the future.
The dividend should increase
With a relatively unstable dividend, it is even more important to see if earnings per share increase. Coforge has impressed us by increasing EPS by 22% per year over the past five years. The company has no problem growing, despite returning much of the capital to shareholders, which is a very nice combination for a dividend-paying stock.
We really like the Coforge dividend
Overall, we think it’s a great income investment and we think keeping the dividend this year may have been a prudent choice. Distributions are quite easily covered by earnings, which are also converted into cash flow. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.
It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. At the same time, there are other factors that our readers should be aware of before investing capital in a stock. For example, we chose 3 warning signs for Coforge that investors should consider. Coforge not quite the opportunity you were looking for? Why not check out our selection of the best dividend stocks.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.