Amdocs' (NASDAQ:DOX) Upcoming Dividend Will Be Larger Than Last Year's

Amdocs Limited (NASDAQ:DOX) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of April to $0.479. This makes the dividend yield about the same as the industry average at 2.1%.

View our latest analysis for Amdocs

Amdocs' Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Amdocs' 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 59.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.

Amdocs Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.52 in 2014, and the most recent fiscal year payment was $1.92. This means that it has been growing its distributions at 14% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Amdocs has been growing its earnings per share at 15% a year over the past five years. Amdocs definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Amdocs' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 7 Amdocs analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Amdocs 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.