GENPACT LTD (NYSE:G) is one of the stocks that surfaces from the Best Dividend screen, a strategy that looks beyond the headline yield by combining a strong ChartMill Dividend Rating with acceptable profitability and financial health. The premise is that a high payout only matters if the company can sustain it, so the screen requires a dividend rating of at least 7 out of 10, a health rating of at least 5, and a profitability rating of at least 5.
A dividend record with room to grow
For Genpact, the dividend rating of 7 reflects a yield that is modest but well supported. The current yearly dividend yield stands at 2.18%, which is higher than both the industry average of 1.32% and the S&P 500 average of 1.72%. More importantly, the payout ratio is just 20.88% of earnings, a level that leaves plenty of room for the company to reinvest in the business while maintaining the dividend.
The sustainability of the payout is reinforced by the company's dividend history. Genpact has paid a dividend for at least 10 years and has not reduced it in the past 5 years. The dividend has also grown at an annual rate of 11.76%, which suggests management is willing to return more cash to shareholders over time. Earnings growth is expected to be around 12.5% per year, so the dividend growth rate is roughly in line with earnings growth, a combination that is generally considered sustainable.
Key dividend metrics
- Dividend rating: 7 / 10
- Yearly dividend yield: 2.18%
- Payout ratio: 20.88%
- Dividend growth (5y annualized): 11.76%
- Dividend history: 10+ years without a cut in the last 5 years
Profitability and health support the payout
The screen's requirement for a profitability rating of at least 5 is comfortably exceeded by Genpact, which scores 9. Return on assets is 10.76%, return on equity is 22.37%, and return on invested capital is 13.82%, all among the better performers in the IT Services industry. Profit margin of 11.10% also ranks well. These figures matter for dividend investors because a company that earns strong returns on its capital is better positioned to fund both growth and dividend payments.
The health rating is 6, which is below the profitability score but still above the screen's minimum. The company has a solid Altman-Z score of 3.32, a debt to free cash flow ratio of 2.18, and a current ratio of 2.00. There are some minor concerns, such as a slightly worse debt to assets ratio compared to a year ago, and the return on invested capital is only just above the cost of capital. These are not red flags, but they explain why the health rating is not higher and they are worth monitoring.
Investors who want to review the full fundamental breakdown, including the detailed ratings and ratios, can consult the fundamental analysis report.
Why these criteria matter for dividend investing
The Best Dividend screen is built around the idea that a high yield can sometimes be a warning sign. When a share price drops sharply, the yield rises mechanically, and if the underlying business is deteriorating, the dividend may be at risk. By requiring a dividend rating of at least 7, the screen filters out companies with weak or unstable payouts. The additional health and profitability filters avoid companies that are struggling with their balance sheet or earning power.
Genpact fits this profile reasonably well. Its dividend is not the highest available, but it is supported by a low payout ratio, a decade-long payment history, and consistent dividend growth. The company also offers a valuation that might appeal to income investors: a price to earnings ratio of 8.64, a forward PE of 7.41, and a low PEG ratio. That said, investors should keep in mind that the health rating is only moderate, and the growth score is a middle-of-the-road 5. The combination still makes Genpact an interesting candidate for dividend-focused investors, especially those who value sustainability over chasing the highest possible yield.
Other screens that reinforce the Genpact case
Beyond the Best Dividend screen, Genpact also appears on screens that look at the same fundamental strength from a different angle. The high free cash flow screen confirms that the company generates strong cash flow relative to its market price, which is exactly the kind of cushion that makes a dividend feel reliable. Genpact also shows up on the value-with-strong-balance-sheets screen, adding support to the idea that the stock is not only attractively valued but also financially solid enough to avoid the classic value trap.
Finding more stocks with the same approach
Investors who want to see which other companies pass the same dividend, profitability, and health criteria can run the full screen and review the current results. More stocks matching this methodology can be found with the Best Dividend stock screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »
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Genpact (NYSE:G) Delivers Dividend Quality with a Sustainable Payout
GENPACT LTD (NYSE:G) is one of the stocks that surfaces from the Best Dividend screen, a strategy that looks beyond the headline yield by combining a strong ChartMill Dividend Rating with acceptable profitability and financial health. The premise is that a high payout only matters if the company can sustain it, so the screen requires a dividend rating of at least 7 out of 10, a health rating of at least 5, and a profitability rating of at least 5.
A dividend record with room to grow
For Genpact, the dividend rating of 7 reflects a yield that is modest but well supported. The current yearly dividend yield stands at 2.18%, which is higher than both the industry average of 1.32% and the S&P 500 average of 1.72%. More importantly, the payout ratio is just 20.88% of earnings, a level that leaves plenty of room for the company to reinvest in the business while maintaining the dividend.
The sustainability of the payout is reinforced by the company's dividend history. Genpact has paid a dividend for at least 10 years and has not reduced it in the past 5 years. The dividend has also grown at an annual rate of 11.76%, which suggests management is willing to return more cash to shareholders over time. Earnings growth is expected to be around 12.5% per year, so the dividend growth rate is roughly in line with earnings growth, a combination that is generally considered sustainable.
Key dividend metrics
Profitability and health support the payout
The screen's requirement for a profitability rating of at least 5 is comfortably exceeded by Genpact, which scores 9. Return on assets is 10.76%, return on equity is 22.37%, and return on invested capital is 13.82%, all among the better performers in the IT Services industry. Profit margin of 11.10% also ranks well. These figures matter for dividend investors because a company that earns strong returns on its capital is better positioned to fund both growth and dividend payments.
The health rating is 6, which is below the profitability score but still above the screen's minimum. The company has a solid Altman-Z score of 3.32, a debt to free cash flow ratio of 2.18, and a current ratio of 2.00. There are some minor concerns, such as a slightly worse debt to assets ratio compared to a year ago, and the return on invested capital is only just above the cost of capital. These are not red flags, but they explain why the health rating is not higher and they are worth monitoring.
Investors who want to review the full fundamental breakdown, including the detailed ratings and ratios, can consult the fundamental analysis report.
Why these criteria matter for dividend investing
The Best Dividend screen is built around the idea that a high yield can sometimes be a warning sign. When a share price drops sharply, the yield rises mechanically, and if the underlying business is deteriorating, the dividend may be at risk. By requiring a dividend rating of at least 7, the screen filters out companies with weak or unstable payouts. The additional health and profitability filters avoid companies that are struggling with their balance sheet or earning power.
Genpact fits this profile reasonably well. Its dividend is not the highest available, but it is supported by a low payout ratio, a decade-long payment history, and consistent dividend growth. The company also offers a valuation that might appeal to income investors: a price to earnings ratio of 8.64, a forward PE of 7.41, and a low PEG ratio. That said, investors should keep in mind that the health rating is only moderate, and the growth score is a middle-of-the-road 5. The combination still makes Genpact an interesting candidate for dividend-focused investors, especially those who value sustainability over chasing the highest possible yield.
Other screens that reinforce the Genpact case
Beyond the Best Dividend screen, Genpact also appears on screens that look at the same fundamental strength from a different angle. The high free cash flow screen confirms that the company generates strong cash flow relative to its market price, which is exactly the kind of cushion that makes a dividend feel reliable. Genpact also shows up on the value-with-strong-balance-sheets screen, adding support to the idea that the stock is not only attractively valued but also financially solid enough to avoid the classic value trap.
Finding more stocks with the same approach
Investors who want to see which other companies pass the same dividend, profitability, and health criteria can run the full screen and review the current results. More stocks matching this methodology can be found with the Best Dividend stock screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »