Why You Might Be Interested In CSG Systems International, Inc. (NASDAQ:CSGS) For Its Upcoming Dividend

It looks like CSG Systems International, Inc. (NASDAQ:CSGS) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 5th of March to receive the dividend, which will be paid on the 25th of March.

CSG Systems International's next dividend payment will be US$0.23 per share, and in the last 12 months, the company paid a total of US$0.94 per share. Based on the last year's worth of payments, CSG Systems International stock has a trailing yield of around 2.1% on the current share price of $44.38. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether CSG Systems International has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for CSG Systems International

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CSG Systems International paid out a comfortable 34% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that CSG Systems International's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, CSG Systems International's earnings per share have been growing at 19% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. CSG Systems International has delivered 6.6% dividend growth per year on average over the past seven years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Has CSG Systems International got what it takes to maintain its dividend payments? CSG Systems International has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. CSG Systems International looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Wondering what the future holds for CSG Systems International? See what the three analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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