CyberTech Systems and Software (NSE:CYBERTECH) Is Increasing Its Dividend To ₹1.50

CyberTech Systems and Software Limited (NSE:CYBERTECH) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of October to ₹1.50. Despite this raise, the dividend yield of 0.9% is only a modest boost to shareholder returns.

See our latest analysis for CyberTech Systems and Software

CyberTech Systems and Software's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, CyberTech Systems and Software was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 17.0% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 16%, which is in the range that makes us comfortable with the sustainability of the dividend.

CyberTech Systems and Software Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the dividend has gone from ₹1.00 total annually to ₹1.50. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. CyberTech Systems and Software has seen EPS rising for the last five years, at 17% per annum. CyberTech Systems and Software definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

CyberTech Systems and Software Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that CyberTech Systems and Software is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for CyberTech Systems and Software that investors should know about before committing capital to this stock. Is CyberTech Systems and Software not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.