Genpact Ltd's Dividend Analysis
Assessing the Upcoming Dividend and Company Fundamentals
Genpact Ltd (NYSE:G) recently announced a dividend of $0.15 per share, payable on 2024-03-26, with the ex-dividend date set for 2024-03-08. 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 Genpact Ltd's dividend performance and assess its sustainability.
What Does Genpact Ltd Do?
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Genpact Ltd is a provider of business process management services. Clients are industry verticals and operate in banking and financial services, insurance, capital markets, consumer product goods, life sciences, infrastructure, manufacturing and services, healthcare, and high-tech. Genpact's services include aftermarket, direct procurement, risk and compliance, human resources, IT, industrial solutions, collections, finance and accounting, and media services. Genpact's end market by revenue is India. It is a General Electric spin-off, which is still a large source of revenue for Genpact.
A Glimpse at Genpact Ltd's Dividend History
Genpact Ltd 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 Genpact Ltd's Dividend Yield and Growth
As of today, Genpact Ltd currently has a 12-month trailing dividend yield of 1.60% and a 12-month forward dividend yield of 1.77%. This suggests an expectation of increase dividend payments over the next 12 months.
Genpact Ltd's dividend yield of 1.60% is near a 10-year high and outperforms than 49.89% of global competitors in the Software industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Over the past three years, Genpact Ltd's annual dividend growth rate was 12.10%. Extended to a five-year horizon, this rate increased to 13.00% per year.
Based on Genpact Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Genpact Ltd stock as of today is approximately 2.95%.
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, Genpact Ltd's dividend payout ratio is 0.16.
Genpact Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Genpact Ltd'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. Genpact Ltd'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 Genpact Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Genpact Ltd's revenue has increased by approximately 8.50% per year on average, a rate that underperforms than approximately 50.75% 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, Genpact Ltd's earnings increased by approximately 27.30% per year on average, a rate that underperforms than approximately 27.66% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 16.80%, which underperforms than approximately 40.05% of global competitors.
Concluding Thoughts on Genpact Ltd's Dividends
The analysis of Genpact Ltd's upcoming dividend, historical dividend performance, growth potential, and financial health paints a comprehensive picture for investors. With a solid dividend history, an attractive yield near a 10-year high, and a modest payout ratio, Genpact Ltd stands as a potentially strong candidate for income-focused portfolios. Coupled with a high profitability rank and favorable growth metrics, the company's dividends appear sustainable in the near term. However, investors should also consider the mixed performance in revenue and earnings growth rates compared to industry peers, which could influence long-term dividend sustainability. As value investors weigh these factors, they might ponder: Will Genpact Ltd continue to deliver dividends that balance growth and yield, and how will future industry dynamics affect this balance?
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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.
This article first appeared on GuruFocus.
