Updated 3/6/25
CSG Systems International might not be a household name, but it plays a crucial role in helping telecom providers, cable operators, and digital service companies manage customer engagement and billing systems. With a long history in this space, the company has built a steady revenue stream that supports its dividend payments.
While CSGS operates in a competitive industry, it has consistently delivered reliable earnings, allowing it to reward shareholders with dividends. With a market cap of around $1.82 billion and a dividend yield above 2%, this mid-cap stock isn’t aiming for high-flying growth but instead provides steady cash flow for income-focused investors.
Key Dividend Metrics
💰 Dividend Yield: 2.03% (Forward)
📈 5-Year Average Dividend Yield: 2.07%
🛡 Payout Ratio: 39.6%
📆 Next Dividend Payment Date: April 2, 2025
📉 Ex-Dividend Date: March 19, 2025
🚀 Dividend Growth: Consistent annual increases
Dividend Overview
CSGS pays a quarterly dividend and has a history of steady, reliable payouts. Currently, the company’s forward annual dividend is set at $1.28 per share, giving it a yield of about 2.03%. This yield is right in line with its five-year average, suggesting that the stock isn’t overly expensive compared to its historical norms.
A key factor for dividend investors is sustainability, and with a payout ratio of 39.6%, CSGS has no trouble maintaining its dividend. This means the company is keeping a balance between rewarding shareholders and reinvesting in the business for future growth.
Dividend Growth and Safety
One of the more appealing aspects of CSGS’s dividend is its consistency. The company has been increasing its payout regularly, even if the growth rate isn’t particularly aggressive.
Steady earnings growth gives CSGS room to continue raising its dividend over time. The latest report showed quarterly earnings growth of 172% year-over-year, which is a strong signal that the company is on solid financial footing.
The company’s cash flow is another reassuring sign. With operating cash flow of $135.72 million and levered free cash flow of $150.3 million, CSGS has more than enough resources to cover its dividends while still investing in new opportunities.
For long-term income investors, this combination of slow but steady dividend increases and strong financial backing is a good sign that the payouts will remain reliable.
Chart Analysis
Recent Price Action
CSG Systems International (CSGS) has been on a strong uptrend, with a significant breakout in late 2024 that pushed the stock from the $45 range to over $65. The price is currently pulling back slightly after a sharp rally, but overall, the trend remains bullish. The stock recently hit a high of $67.60, and while it’s cooled off a bit, it’s still trading well above key moving averages.
Moving Averages
The 50-day moving average (orange line) is trending upward and currently sits below the price, indicating continued bullish momentum. The 200-day moving average (blue line) is also rising, though at a slower pace, reinforcing the idea that this stock is in a longer-term uptrend. The key moment was when the 50-day crossed above the 200-day back in late 2024, a classic golden cross signal that often marks the beginning of a sustained rally.
Volume Trends
Volume spiked noticeably in early February, coinciding with the steep rally in price. This suggests strong institutional buying pressure at that time. More recently, volume has normalized, but there haven’t been any major distribution days where sellers completely took control. This implies that while the stock is experiencing some short-term consolidation, there’s no clear sign of a major reversal.
RSI and Momentum
The Relative Strength Index (RSI) currently sits around 51.8, which suggests that the stock is in neutral territory. It recently pulled back from overbought levels, which aligns with the price cooling off from its highs. While it’s no longer in the extreme buying zone, it hasn’t dipped into oversold conditions either, meaning there’s still room for potential movement in either direction.
Support and Resistance
Right now, support is likely around the 50-day moving average, which sits in the mid-$50s. This level has been rising alongside the stock and could provide a cushion if the pullback continues. On the upside, resistance is near the recent highs of $67.60, where the stock struggled to push higher before pulling back. If it retests this level and breaks through, there could be another leg higher.
Market Context
This rally appears to be part of a broader shift in sentiment for the stock, with momentum accelerating in late 2024. The initial breakout was backed by strong volume, and despite some minor pullbacks, the price action remains constructive. However, as the stock moves further from its long-term support levels, some profit-taking could be expected.
Analyst Ratings
Upgrades
📈 Stifel Nicolaus: Recently lifted its price target for CSGS from $60 to $66, maintaining a buy rating. This adjustment came after the company posted strong quarterly earnings and demonstrated solid revenue growth, which reassured analysts about its long-term potential.
🚀 RBC Capital Markets: Also raised its price target from $58 to $69, reaffirming an outperform rating. The firm pointed to CSGS’s ability to win new clients and expand its market share as key reasons for its optimism.
Downgrades
⚖️ StockNews.com: Adjusted its stance on CSGS, moving it from a strong buy to a buy rating. This downgrade wasn’t a sign of trouble, but rather a recognition that the stock had already seen a strong run-up in price, potentially limiting short-term gains.
📉 Wells Fargo & Company: Shifted its rating from overweight to equal weight, while still raising the price target from $51 to $65. The firm expressed some caution, noting that while CSGS has been executing well, there could be challenges in maintaining its growth trajectory within an increasingly competitive industry.
Consensus Price Target
🔮 Analyst consensus places the twelve-month price target at $71.71, with estimates ranging from $65 to $80. This suggests an anticipated upside of around 13.28% from current levels, reinforcing a generally optimistic but measured outlook on the stock’s future performance.
Earnings Report Summary
CSG Systems International wrapped up the fourth quarter of 2024 on a high note, delivering record revenue of $317 million, up 7% from the same time last year. Most of this growth came from a solid 5% organic revenue increase, showing that the company’s core business is still expanding at a healthy pace.
Profitability also saw a nice boost. Operating income climbed to 20.1% of revenue, a clear sign that CSG is managing costs efficiently while keeping operations running smoothly. The company’s adjusted EBITDA margin hit 24.8%, reinforcing the idea that it’s not just growing but doing so in a financially sound way.
One of the standout numbers from the quarter was earnings per share (EPS), which surged 79% year-over-year to $1.65. That kind of jump speaks volumes about how well the company is balancing revenue growth with profitability, making it an even more attractive pick for long-term investors.
For the full year, total revenue came in at $1.20 billion, a 2.4% increase over 2023. Net income for the year totaled $86.85 million, keeping CSG on a steady upward trajectory.
Another bright spot was cash flow. Free cash flow grew 9% year-over-year to $113 million, giving the company plenty of flexibility to invest in new initiatives while also rewarding shareholders.
Speaking of shareholder returns, CSG announced a 7% dividend increase, marking 12 straight years of dividend growth. For income-focused investors, that consistency is a big deal—it’s a sign that management is confident in the company’s long-term financial strength.
Overall, this earnings report showed strong top-line growth, improving margins, and a clear commitment to returning capital to shareholders. CSG continues to execute well, balancing growth and profitability while keeping investors happy with steady dividend increases.
Financial Health and Stability
A company’s ability to maintain dividends depends on its overall financial strength. CSGS has a solid balance sheet, but there are a few areas to watch.
Revenue has been growing steadily, with the latest numbers showing $1.2 billion in trailing twelve-month revenue and a 6.5% year-over-year increase. Operating margin sits at 15.68%, which is healthy for a company in this space. The return on equity is also strong at 31.25%, indicating that management is using shareholder capital efficiently.
One concern is the company’s debt load. CSGS has $583.08 million in total debt, with a debt-to-equity ratio of 206.35%. While the company generates enough cash flow to manage this debt, high leverage can be a risk if interest rates rise or if the company faces unexpected financial challenges.
Overall, the company’s financial health is strong, with stable cash flow supporting both operations and dividends. However, the high debt ratio is something to keep an eye on.
Valuation and Stock Performance
For investors looking to buy a dividend stock at a reasonable price, valuation is an important factor. CSGS is currently trading at a price-to-earnings ratio of 20.83, which is fairly standard for a company in this space. The forward P/E of 13.32 suggests that analysts expect earnings to grow, which could make the stock look more attractive in the future.
The stock has been performing well over the past year, with a 52-week high of $67.60 and a low of $39.56. It is currently trading near the higher end of that range, which suggests that much of the good news has already been factored into the price.
The 50-day moving average is $57.81, while the 200-day moving average sits at $49.73, indicating an overall uptrend. Compared to the broader market, CSGS has outperformed, gaining 18.76% over the past year, while the S&P 500 posted a 12% gain in the same period.
Risks and Considerations
Even though CSGS offers reliable dividends and steady earnings, there are a few risks that investors should consider.
One of the biggest concerns is its high debt burden. A debt-to-equity ratio above 200% is high, and if interest rates remain elevated, the company could face rising borrowing costs.
Another risk is the company’s dependence on a relatively small number of large customers in the telecom and cable sectors. If these industries go through major shifts or cut back on spending, CSGS could feel the impact.
Competition is another factor to watch. The digital services and billing solutions space is evolving, and newer, more agile players could present a challenge over time. While CSGS has a strong track record, it will need to continue innovating to stay ahead.
Lastly, while the company has been growing its dividend, the pace of increases has been modest. Investors looking for high-growth dividend stocks may find better options elsewhere.
Final Thoughts
CSG Systems International may not be the most exciting stock, but it is a reliable dividend payer with a strong history of returning cash to shareholders.
The company’s financials are stable, with strong cash flow supporting its dividend payments. Earnings growth has been solid, and the valuation appears reasonable given its forward-looking estimates.
However, the high debt load is a potential red flag, and dividend growth has been more moderate compared to some other income-focused stocks.
For investors who prioritize consistency over rapid dividend growth, CSGS is worth considering as a steady, income-generating stock in the tech space.
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