Tata Consultancy Services (NSE:TCS) Has Announced A Dividend Of ₹9.00

The board of Tata Consultancy Services Limited (NSE:TCS) has announced that it will pay a dividend on the 9th of November, with investors receiving ₹9.00 per share. Based on this payment, the dividend yield will be 1.8%, which is fairly typical for the industry.

See our latest analysis for Tata Consultancy Services

Tata Consultancy Services' Projected Earnings Seem Likely To Cover Future Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Tata Consultancy Services' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 41.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 45% by next year, which is in a pretty sustainable range.

Tata Consultancy Services Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ₹16.00 in 2014, and the most recent fiscal year payment was ₹74.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See Tata Consultancy Services' Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Tata Consultancy Services has impressed us by growing EPS at 8.7% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Tata Consultancy Services Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 42 analysts we track are forecasting for Tata Consultancy Services for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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