Zensar Technologies Limited The stock (NSE: ZENSARTECH) is about to trade ex-dividend in 3 days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for the payment of a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. This means that you will have to buy shares of Zensar Technologies before September 15 to receive the dividend, which will be paid on October 28.
The company’s next dividend payment will be 2.40 per share, and over the past 12 months, the company has paid a total of 3.60 per share. Based on the value of last year’s payouts, Zensar Technologies has a rolling 0.8% return on the current share price of 467.8. Dividends are an important source of income for many shareholders, but the health of the business is crucial to sustaining these dividends. So we need to determine whether Zensar Technologies can afford its dividend and whether the dividend could increase.
See our latest review for Zensar Technologies
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Zensar Technologies pays only 25% of its profit after tax, which is comfortably low and leaves a lot of leeway in the event of adverse events. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. Fortunately, he only paid 3.3% of his free cash flow last year.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. That’s why it’s a relief to see Zensar Technologies’ earnings per share up 2.2% per year over the past five years. Zensar Technologies retains more than three-quarters of its profits and is used to generating some growth in its profits. We think it’s a reasonable combination.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past 10 years, Zensar Technologies has increased its dividend by approximately 18% per year on average. It is encouraging to see the company raising its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.
The bottom line
From a dividend perspective, should investors buy or avoid Zensar Technologies? Earnings per share growth has increased somewhat and Zensar Technologies pays less than half of its earnings and cash flow as dividends. This is interesting for several reasons, as it suggests that management may be reinvesting heavily in the company, but it also helps to increase the dividend over time. It might be nice to see profits rise faster, but Zensar Technologies is careful with its dividend payouts and could still perform reasonably well over the long term. It is a promising combination that should mark this company worthy of further attention.
With this in mind, an essential part of in-depth stock research is being aware of the risks stocks currently face. Our analysis shows 1 warning sign for Zensar Technologies and you need to be aware of this before you buy any stocks.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
If you are looking to trade Zensar Technologies, open an account with the cheapest * platform that professionals trust, Interactive Brokers. Their clients from more than 200 countries and territories trade stocks, options, futures, currencies, bonds and funds around the world from a single integrated account. Promoted
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.