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Cognizant Technology Solutions Corp Logo

Cognizant Technology Solutions Corp
NASDAQ:CTSH

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Cognizant Technology Solutions Corp Logo
Cognizant Technology Solutions Corp
NASDAQ:CTSH
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Summary
DCF Valuation
Relative Valuation
Wall St Estimates
Profitability
Solvency
Financials
Dividends
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Discount Rate
Price: 75.36 USD -1.79% Market Closed
Market Cap: 37.1B USD
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CTSH Alert
Cognizant Technology Solutions Corp
75.36
-1.37 (-1.79%)
52 Week Range
66.47
90.39
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Popular Prompts Strategic Analysis Valuation Future Outlook Peer Analysis Profitability Solvency Financials
Intrinsic ValueFundamental AnalysisWall St Price TargetsDividendsCompetitive LandscapeOwnershipNewsSee Also
Section:
Intrinsic Value
Intrinsic Value
Fundamental Analysis
Wall St Price Targets
Dividends
Competitive Landscape
Ownership
News
See Also

Intrinsic Value

The intrinsic value of one CTSH stock under the Base Case scenario is 86.17 USD. Compared to the current market price of 75.36 USD, Cognizant Technology Solutions Corp is Undervalued by 13%.

The Intrinsic Value is calculated as the average of DCF and Relative values:

DCF Value
77.89 USD
Relative Value
94.46 USD
DCF Value
77.89 USD
Relative Value
94.46 USD
What is Intrinsic Value? What is DCF Value? What is Relative Value?
CTSH Intrinsic Value
86.17 USD
Undervaluation 13%
Intrinsic Value
Price
Worst Case
Base Case
Best Case

Valuation History
Cognizant Technology Solutions Corp

CTSH is trading at a similar level to its average valuation over the past 5 years. What does this mean?

History Conclusion
Neutral
Current Valuation
13% undervalued
5-Year Average
15% undervaluation
Average Value Growth
1%
Valuation History Insight

Over the past 5 years, CTSH was usually undervalued. On average, its stock price was 15% lower than its intrinsic value.

Today, the stock is undervalued by 13%, which is close to its average valuation over the past 5 years.

Current vs Historical Average
-2%
Low
Current
Historical Avg
High
Current
Valuation
+13%
Historical
Average
+15%
Historical
Low
-11%
Historical
High
+37%
Why You Should Look at the Historical Average

Automated valuation models can sometimes underestimate or overestimate a stock's intrinsic value because they may not account for certain important factors about the company. This limitation makes it useful to consider historical intrinsic values as an additional perspective.

Alpha Spread calculates intrinsic value for each stock based on historical data, allowing you to see how undervalued or overvalued a stock has been on average in the past. This perspective can complement the current valuation and provide a broader context.

For example, the current intrinsic value calculation might indicate that a stock is undervalued by 5%. However, by examining its historical valuation, you might find that the stock has typically been undervalued by an average of 40%. In this case, the current valuation appears expensive compared to its historical trend.

Looking at historical averages helps you understand how a stock’s valuation behaves over time, offering a more informed perspective for making investment decisions.

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Why Intrinsic Value Growth Matters
CTSH Intrinsic Value Growth for the past 5 years:
Total Growth
5%
Average Annual Growth
1%

Think of intrinsic value as the water level in a pool and the stock price as a ball. When a stock is undervalued, the ball is pushed beneath the water. The deeper it’s submerged (the more undervalued the stock), the stronger the pressure pushing it upward.

As intrinsic value grows, the water level rises, increasing the pressure on the ball to surface. This means that a growing intrinsic value not only reflects a stronger business but also amplifies the potential for the stock price to rebound and align with its true value.

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Fundamental Analysis

Cognizant Technology Solutions Corp
NASDAQ:CTSH
US
Technology
Market Cap
37.2B USD
IPO
Jun 24, 1998
US
Technology
Market Cap
37.2B USD
IPO
Jun 24, 1998
Price
$false
EPS
$false
1M
-6%
6M
-2%
1Y
+5%
3Y
+22%
5Y
+43%
10Y
+38%
All
|
Compare to S&P 500
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Cognizant Technology Solutions Corp
Overview Business Segments Economic Moat Management Earnings Calls Contacts
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Bear Theses

Cognizant’s growth could be hampered by stiff competition from rival IT service providers and consultancies that are aggressively investing in next-generation technology solutions, potentially eroding Cognizant’s pricing power in its core digital and cloud offerings.

Heightened attrition rates and potential leadership transitions could challenge Cognizant’s ability to consistently maintain project quality and innovate at the pace required by enterprise customers, leading to slower revenue growth and diminished client satisfaction over time.

A continued slowdown in key verticals such as financial services and healthcare – major revenue drivers for Cognizant – could expose the company to concentrated downside risk if macroeconomic conditions or regulatory shifts reduce client IT spending in these segments.

Bull Theses

Cognizant’s comprehensive digital transformation portfolio positions it to capture rising enterprise demand for cloud migration and advanced analytics, especially as businesses seek to modernize legacy systems and incorporate AI-driven solutions.

Strategic acquisitions and partnerships with leading cloud providers like AWS, Microsoft, and Google Cloud bolster Cognizant’s ability to deliver end-to-end solutions, enhancing its competitive edge in large-scale digital initiatives.

Ongoing investments in global delivery centers and reskilling programs allow Cognizant to provide high-quality services at scale, enabling the firm to meet evolving customer needs and improve long-term profitability in an increasingly digital marketplace.

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based on the latest financial data?

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(gross, operating, and net) of Cognizant Technology Solutions Corp compared to its peers.

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of Cognizant Technology Solutions Corp against its peers.

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for Cognizant Technology Solutions Corp.

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for Cognizant Technology Solutions Corp.

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for Cognizant Technology Solutions Corp.

What is the historical Revenue growth
over the last 5 years for Cognizant Technology Solutions Corp?

What is the historical Net Income growth
over the last 5 years for Cognizant Technology Solutions Corp?

What is the current Free Cash Flow
of Cognizant Technology Solutions Corp?

Discuss the annual earnings per share (EPS)
trend over the past five years for Cognizant Technology Solutions Corp.

Popular Prompts Strategic Analysis Valuation Future Outlook Peer Analysis Profitability Solvency Financials
Financials
Annual
Quarterly
TTM
Annual
Quarterly
TTM
0
Revenue
0
Operating Income
0
Net Income
0
EPS
0
Operating Cash Flow
0
Free Cash Flow

Revenue & Expenses Breakdown
Cognizant Technology Solutions Corp

Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Dec 2017 Mar 2018 Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sep 2020 Dec 2020 Mar 2021 Jun 2021 Sep 2021 Dec 2021 Mar 2022 Jun 2022 Sep 2022 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Sep 2024 Dec 2024 Mar 2025
A
Q
TTM

Balance Sheet Decomposition
Cognizant Technology Solutions Corp

20B
Assets
5.1B
Liabilities
20B
Assets
5.1B
Liabilities
Current Assets 7.5B
Cash & Short-Term Investments 2B
Receivables 4.2B
Other Current Assets 1.3B
Non-Current Assets 12.4B
Long-Term Investments 94m
PP&E 1.5B
Intangibles 8.6B
Other Non-Current Assets 2.2B
Current Liabilities 3.4B
Accounts Payable 326m
Accrued Liabilities 1.8B
Other Current Liabilities 1.3B
Non-Current Liabilities 1.7B
Long-Term Debt 567m
Other Non-Current Liabilities 1.1B
Efficiency

Free Cash Flow Analysis
Cognizant Technology Solutions Corp

Last Value
3-Years Average
FCF Margin
Conversion Rate
0
Gross Margin
0
Operating Margin
0
Net Margin
0
FCF Margin
0
ROE
0
ROA
0
ROIC
0
ROCE

Earnings Waterfall
Cognizant Technology Solutions Corp

Revenue
20.1B USD
Cost of Revenue
-13.2B USD
Gross Profit
6.9B USD
Operating Expenses
-3.8B USD
Operating Income
3.1B USD
Other Expenses
-742m USD
Net Income
2.4B USD
Fundamental Scores

CTSH Profitability Score
Profitability Due Diligence

Cognizant Technology Solutions Corp's profitability score is 54/100. The higher the profitability score, the more profitable the company is.

Positive 3Y Average ROE
Positive 3Y Average ROIC
Positive ROE
Healthy Gross Margin
Positive 3Y Average ROE
18%
Positive 3Y Average ROIC
15%
Positive ROE
17%
Healthy Gross Margin
34%
54/100
Profitability
Score

Cognizant Technology Solutions Corp's profitability score is 54/100. The higher the profitability score, the more profitable the company is.

View Profitability Analysis
CTSH Profitability Report
View Profitability Analysis

CTSH Solvency Score
Solvency Due Diligence

Cognizant Technology Solutions Corp's solvency score is 94/100. The higher the solvency score, the more solvent the company is.

High Interest Coverage
High Altman Z-Score
Long-Term Solvency
Low D/E
High Interest Coverage
57.09
High Altman Z-Score
7.17
Long-Term Solvency Low D/E
0.04
94/100
Solvency
Score

Cognizant Technology Solutions Corp's solvency score is 94/100. The higher the solvency score, the more solvent the company is.

View Solvency Analysis
CTSH Solvency Report
View Solvency Analysis

Wall St
Price Targets

CTSH Price Targets Summary
Cognizant Technology Solutions Corp

Wall Street analysts forecast CTSH stock price to rise over the next 12 months.

According to Wall Street analysts, the average 1-year price target for CTSH is 88.62 USD with a low forecast of 79.79 USD and a high forecast of 108.15 USD.

CTSH Lowest Forecast
Wall Street Target
79.79 USD
6% Upside
CTSH Average Forecast
Wall Street Target
88.62 USD
18% Upside
CTSH Highest Forecast
Wall Street Target
108.15 USD
44% Upside
Lowest
Price Target
79.79 USD
6% Upside
Average
Price Target
88.62 USD
18% Upside
Highest
Price Target
108.15 USD
44% Upside
View Analyst Estimates
CTSH Analyst Estimates
View Analyst Estimates

Dividends

Dividend Yield
Lowest
Average
Highest
Dividend Per Share
N/A
Growth 3Y
Growth 5Y
Growth 10Y
Dividend Safety Score
Very
Unsafe
Unsafe
Safe
Very
Safe
0
25
50
75
100
What is Dividend Safety Rate?
Shareholder Yield

Current shareholder yield for CTSH is .

Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?

Shareholder Yield
= Dividend Yield
+ Buyback Yield
+ Debt Paydown Yield
Shareholder Yield
Dividend Yield
Lowest
Average
Highest
Buyback Yield
Lowest
Average
Highest
Debt Paydown Yield
Lowest
Average
Highest

Competitive Landscape

Company Market Cap Intrinsic Valuation Profitability Solvency Price Change
1Y 3Y 5Y

Ownership

CTSH Insider Trading
Buy and sell transactions by insiders

CTSH News

Other Videos

See Also

Summary
CTSH intrinsic value, competitors valuation, and company profile.
DCF Valuation
CTSH stock valuation using Discount Cash Flow valuation method.
Relative Valuation
CTSH stock valuation using valuation multiples.
Wall Street Estimates
CTSH price targets and financial estimates made by Wall st analysts.
Profitability Analysis
Detailed analysis of the company's profitability.
Solvency Analysis
Analysis of the financial position and solvency of the company.
Financials
Income Statement, Balance Sheet, Cash Flow Statement.
Discount Rate
CTSH stock discount rate: cost of equity and WACC.
Summary
DCF Valuation
Relative Valuation
Wall Street Estimates
Profitability Analysis
Solvency Analysis
Financials
Discount Rate
Discover More
What is the Intrinsic Value of one CTSH stock?

The intrinsic value of one CTSH stock under the Base Case scenario is 86.17 USD.

Is CTSH stock undervalued or overvalued?

Compared to the current market price of 75.36 USD, Cognizant Technology Solutions Corp is Undervalued by 13%.

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What is intrinsic value?

Stock intrinsic value is the real worth of a company's stock, based on its financial health and performance.

Instead of looking at the stock's current market price, which can change due to people's opinions and emotions, intrinsic value helps us understand if a stock is truly a good deal or not.

By focusing on the company's actual financial strength, like its earnings and debts, we can make better decisions about which stocks to buy and when.

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What is DCF valuation?

Discounted Cash Flow (DCF) valuation is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money.

DCF valuation is one of two methods of placing a monetary value on a company; the other is Relative Valuation method. We use a combination of these two methods to calculate the Intrinsic Value of stock as accurately as possible.

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How is DCF value calculated?

Alpha Spread forecasts a company's future cash flow and estimates the appropriate discount rate to calculate the DCF value of a stock.

1. Free cash flow forecasting

You can view the operating model used to estimate free cash flow in the "DCF Operating Model" block. You can change model inputs forecasted by our algorithm (such as revenue growth, margins, etc.) if you are a professional analyst and have your own opinion about them.
Click here to read more about FCF forecasting.

2. Calculating present value

Once free cash flow is forecasted, it is discounted at a risk-appropriate discount rate (which you can also change in the DCF settings). The resulting value is the present value of the company's free cash flow.

DCF Operating Model
Capital Structure
3. Calculating the value of equity

Depending on which type of operating model for the company our algorithm has chosen (equity or whole firm valuation model), the resulting value is either the value of equity or the value of the entire firm. In the case of the latter, to move from the value of the firm to the value of equity, liabilities are subtracted and assets are added. You can see these and subsequent steps in the block "Capital structure".

4. Calculating the DCF value of one stock

In order to come from the value of equity to the DCF value of one share, we only need divide the equity value by the number of shares outstanding.

See Also:
What is DCF valuation? What are valuation scenarios?
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What are valuation scenarios?

A stock has no absolute intrinsic value because the future is not predetermined.

We build several DCF models for different scenarios of the company's future so you can see a complete picture of the investment risks and opportunities.

See Also:
What is DCF valuation? How is DCF value calculated?
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What is relative valuation?

Relative valuation is used to value companies by comparing them to other businesses based on certain metrics such as EV/Revenue, EV/EBITDA, and P/E ratios.

Relative valuation is one of two methods of placing a monetary value on a company; the other is Discounted Cash Flow valuation method. We use a combination of these two methods to calculate the Intrinsic Value of stock as accurately as possible.

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How is Relative Value calculated?

Our algorithm takes into account all the information about the company's valuation multiples (their historical values, how competitors are priced, and much more) and consolidates it into one single number - relative value.

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Understanding Valuation History

Valuation history is a powerful tool that allows you to see how a stock's valuation has changed over time.

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What is Economic Moat

The most important thing to me is figuring out how big a moat there is around the business. What I love, of course, is a big castle and a big moat with piranhas and crocodiles.

Warren Buffett

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Research Insights: The Power of Wide Economic Moat

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

How We Determine a Company's Economic Moat

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

Wide Moat
Strong and sustainable advantages that are expected to last for decades
Narrow Moat
Moderate advantages that provide some protection but are less durable
No Moat
No identifiable long-term competitive advantages

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

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What is Free Cash Flow?

Free Cash Flow (FCF) is the money a company has left over after it pays for all its expenses and any investments it needs to make to keep the company running smoothly.

Think of it like your personal budget at home: after you pay for your necessities, like rent and groceries, and set aside money for future needs, like saving for a car or home repairs, the cash you have left is what you're free to spend or save as you wish.

Why is FCF important?

It's a sign of a company's health and its ability to do things like grow its business, pay dividends to shareholders, or reduce debt.

Flexibility: Companies with more FCF can make big moves without having to borrow money or ask for more investment, giving them the freedom to grow or tackle new projects on their terms.

Rewards for Investors: When a company has extra cash, it can decide to give some back to its investors through dividends or by buying back shares, which can increase the value of the remaining shares.

A Healthy Sign: Regularly having more cash coming in than going out shows that a company is doing well, making smart decisions, and earning more than it spends.

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Shareholder Yield is an integrated metric that represents the total returns a company delivers to its shareholders, including dividends, share buybacks, and debt reduction. It offers a holistic view of a company's capital return strategies, going beyond simple dividend yields to encompass all forms of shareholder returns.

Components

The calculation of Shareholder Yield involves summing the dividend yield, buyback yield, and debt paydown yield:

• Dividend Yield is calculated by dividing the annual dividends per share by the stock price per share.

• Buyback Yield reflects the decrease in shares outstanding, showing how much a company is investing in repurchasing its shares.

• Debt Paydown Yield measures the reduction of debt in relation to the company’s market capitalization, highlighting efforts to reduce financial liabilities.

Implications for Investors

High Shareholder Yield is often associated with superior long-term performance in the stock market, making it a crucial measure for investors seeking stocks that consistently deliver high returns through dividends, buybacks, and effective debt management. This metric highlights the importance of looking beyond traditional dividend yields to consider how companies return capital to shareholders in other ways, enhancing overall investment analysis.

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Buyback Yield measures how much a company reduces its outstanding shares through repurchases, expressed as a percentage. It is calculated by taking the decrease in shares outstanding during a period, dividing it by the total shares at the beginning of that period, and then converting this figure into a percentage.

This metric is crucial for calculating Shareholder Yield as it directly reflects the company’s efforts to return value to shareholders. By reducing the number of shares, buybacks can increase earnings per share and potentially boost the stock's price. Including Buyback Yield provides a fuller understanding of how capital is used to enhance shareholder returns, alongside dividends and debt reduction.

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Debt Paydown Yield measures the amount of debt a company repays within a specific period, shown as a percentage of its market capitalization. It is calculated by taking the reduction in total debt from the beginning to the end of the period, dividing this amount by the company's market capitalization at the start of the period, and then expressing the result as a percentage.

This metric is important for calculating Shareholder Yield because it indicates how the company is using its capital to decrease financial liabilities, which can strengthen its financial health and potentially enhance shareholder value. Including Debt Paydown Yield in the Shareholder Yield calculation gives investors insight into the company's commitment to reducing debt alongside returning value through dividends and buybacks.

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Why insider trading information is important

Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

Peter Lynch

It isn't a coincidence that corporate executives seem to always buy at the right times. After all, they have access to every bit of company information you could ever want. However, the fact that company executives have unique insights doesn't mean that individual investors are always left in the dark. Insider trading data is out there for all who want to use it.

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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.

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Current vs Historical Average

Current vs Historical Average shows the difference between a stock's current undervaluation or overvaluation and its average over the past five years.

A larger gap means a greater potential for profit if the stock returns to its typical valuation.

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Dividend Safety Rate

Dividend Safety Rate is a comprehensive numerical rating that helps investors evaluate the risk associated with a company’s dividend payments. Ranging from 0 to 100, the rate provides an assessment where higher values denote greater security and lower likelihood of a dividend cut. This measure is particularly valuable for income-focused investors as it synthesizes key financial indicators including payout ratios, dividend history, and the overall financial health of the company.

Risk Categories
0-25
Very Unsafe
High risk of dividend cut
26-50
Unsafe
Dividend is vulnerable
51-75
Safe
Dividend is well-supported
76-100
Very Safe
Dividend is highly secure
Rigorous Analysis

By incorporating both dividend performance and broader financial metrics, the Dividend Safety Rate offers a holistic view of a company’s ability to maintain and potentially increase its dividend payments.

In calculating the Dividend Safety Rate, we consider a variety of financial metrics:

Multiple Payout Ratios: These include the current payout ratio and average historical payout ratios, which help assess how comfortably a company can cover its dividend payments with its earnings.

Dividend Growth Streak: The number of consecutive years a company has increased its dividend, indicating reliability and stability in its dividend policy.

Solvency and Profitability Ratios: These ratios evaluate a company’s ability to meet its long-term obligations and its overall financial health, which are crucial for sustaining dividend payments over time.

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