Investors In Genpact Limited (NYSE:G) Should Consider This Data
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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Genpact Limited (NYSE:G) has paid a dividend to shareholders in the last few years. It currently yields 1.0%. Let’s dig deeper into whether Genpact should have a place in your portfolio.
View our latest analysis for Genpact
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown 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 Genpact pass our checks?
Genpact has a trailing twelve-month payout ratio of 20%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 16% which, assuming the share price stays the same, leads to a dividend yield of 1.1%. However, EPS should increase to $1.59, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Genpact as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Genpact produces a yield of 1.0%, which is on the low-side for IT stocks.
Next Steps:
After digging a little deeper into Genpact’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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 aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for G’s future growth? Take a look at our free research report of analyst consensus for G’s outlook.
Valuation: What is G 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 G is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
