3 Days Left To Tata Consultancy Services Limited (NSE:TCS)’s Ex-Dividend Date, Is It Worth Buying?
Important news for shareholders and potential investors in Tata Consultancy Services Limited (NSEI:TCS): The dividend payment of ₹7 per share will be distributed into shareholder on 31 January 2018, and the stock will begin trading ex-dividend at an earlier date, 22 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Tata Consultancy Services’s latest financial data to analyse its dividend characteristics. View our latest analysis for Tata Consultancy Services
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
Does Tata Consultancy Services pass our checks?
The current payout ratio for the stock is 36.83%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect TCS’s payout to increase to 42.04% of its earnings, which leads to a dividend yield of around 2.12%. Furthermore, EPS should increase to ₹144.19. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although TCS’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Tata Consultancy Services generates a yield of 1.63%, which is high for it stocks but still below the low risk savings rate.
Next Steps:
If Tata Consultancy Services is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three key factors you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for TCS’s future growth? Take a look at our free research report of analyst consensus for TCS’s outlook.
2. Valuation: What is TCS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TCS is currently mispriced by the market.
3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
