Genpact (NYSE:G) Has Affirmed Its Dividend Of US$0.11
Genpact Limited's (NYSE:G) investors are due to receive a payment of US$0.11 per share on 24th of September. This means the annual payment will be 0.8% of the current stock price, which is lower than the industry average.
Check out our latest analysis for Genpact
Genpact's Dividend Is Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, Genpact's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS is forecast to expand by 13.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.
Genpact Doesn't Have A Long Payment History
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from US$0.24 in 2017 to the most recent annual payment of US$0.43. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
Genpact Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Genpact has impressed us by growing EPS at 6.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Genpact's prospects of growing its dividend payments in the future.
In Summary
Overall, a consistent dividend is a good thing, and we think that Genpact has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Genpact that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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