CyberTech Systems and Software Limited (NSE:CYBERTECH) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Readers hoping to buy CyberTech Systems and Software Limited (NSE:CYBERTECH) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 21st of September in order to be eligible for this dividend, which will be paid on the 26th of October.

CyberTech Systems and Software's next dividend payment will be ₹1.00 per share, and in the last 12 months, the company paid a total of ₹1.00 per share. Based on the last year's worth of payments, CyberTech Systems and Software stock has a trailing yield of around 1.6% on the current share price of ₹62. If you buy this business for its dividend, you should have an idea of whether CyberTech Systems and Software's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for CyberTech Systems and Software

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. CyberTech Systems and Software has a low and conservative payout ratio of just 18% of its income after tax. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 20% of its free cash flow as dividends last year, which is conservatively low.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit CyberTech Systems and Software paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see CyberTech Systems and Software has grown its earnings rapidly, up 24% a year for the past five years. CyberTech Systems and Software looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. CyberTech Systems and Software's dividend payments are broadly unchanged compared to where they were 10 years ago.

The Bottom Line

Is CyberTech Systems and Software an attractive dividend stock, or better left on the shelf? CyberTech Systems and Software has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

So while CyberTech Systems and Software looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 4 warning signs for CyberTech Systems and Software that you should be aware of before investing in their shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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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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