SS&C Technologies Holdings' (NASDAQ:SSNC) Dividend Will Be Increased To $0.24

The board of SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has announced that it will be increasing its dividend by 20% on the 15th of September to $0.24, up from last year's comparable payment of $0.20. This makes the dividend yield about the same as the industry average at 1.4%.

Check out our latest analysis for SS&C Technologies Holdings

SS&C Technologies Holdings' Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, SS&C Technologies Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 53.6% over the next year. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.

SS&C Technologies Holdings Doesn't Have A Long Payment History

It is great to see that SS&C Technologies Holdings has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2014, the annual payment back then was $0.25, compared to the most recent full-year payment of $0.80. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. SS&C Technologies Holdings has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. SS&C Technologies Holdings has seen EPS rising for the last five years, at 20% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

SS&C Technologies Holdings Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for SS&C Technologies Holdings that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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