Updated 3/10/25

Genpact Limited (NYSE: G) is a global professional services firm that specializes in digital transformation, analytics, and outsourcing solutions. The company started as a business unit within General Electric and later became an independent entity. Today, it serves a diverse range of industries, including banking, insurance, healthcare, and consumer goods.

For investors focused on dividends, Genpact isn’t a high-yield stock, but it does offer a consistent and growing payout backed by a strong financial foundation. Let’s take a deeper look at what makes this stock appealing for dividend-focused portfolios.

Key Dividend Metrics

📈 Forward Dividend Yield: 1.32%
💰 Annual Dividend Rate: $0.68
🔄 5-Year Average Dividend Yield: 1.18%
📊 Payout Ratio: 21.40% (low and sustainable)
📅 Next Dividend Payment Date: March 26, 2025
⚠️ Ex-Dividend Date: March 11, 2025

Dividend Overview

Genpact pays a dividend yield of 1.32%, which is relatively modest compared to high-yield stocks. However, it aligns with the company’s historical dividend performance, staying close to its five-year average of 1.18%.

The biggest advantage for dividend investors is the low payout ratio of 21.4%. This means the company only distributes a small portion of its earnings as dividends, leaving room for future increases while ensuring sustainability. For those who prioritize reliable dividend payments, this is a reassuring sign.

While Genpact isn’t necessarily a dividend powerhouse, it offers consistency. Its track record of steady payouts makes it a reliable choice for long-term investors who want both income and growth potential.

Dividend Growth and Safety

Dividend safety is a key factor for long-term investors, and Genpact scores well in this category. The company has been increasing its dividend gradually, demonstrating a commitment to rewarding shareholders without overextending its financial resources.

• Dividend Growth: While Genpact does not have an aggressive dividend growth strategy, it has consistently increased its payout over time.
• Payout Stability: The low payout ratio ensures that dividends remain well-covered, reducing the risk of cuts even in challenging economic conditions.
• Cash Flow Strength: Operating cash flow of $615.42 million and levered free cash flow of $426.65 million further solidify its ability to sustain dividend payments.

For investors who value dividend safety, Genpact’s financial strength and prudent payout strategy provide confidence in its long-term sustainability.

Chart Analysis

Price Movement

The stock has been on a strong uptrend over the past several months, with a clear breakout above previous resistance levels. The move above both the 50-day and 200-day simple moving averages suggests a shift in momentum, confirming a bullish trend. After a steady rise, the price reached a peak and has since pulled back slightly, though it remains well above key support levels.

Moving Averages

The 50-day moving average is trending upward and remains significantly above the 200-day moving average. This type of crossover is often viewed as a bullish signal, indicating that the stock has moved into a higher momentum phase. The fact that the price is still trading above both moving averages reinforces the strength of the trend.

Volume Analysis

Trading volume has shown periodic spikes, particularly during upward price movements. This suggests that buying interest has been strong during rallies, with increased participation from investors. However, more recent volume appears to have tapered off slightly, which could indicate some consolidation or profit-taking.

Relative Strength Index (RSI)

The RSI shows that the stock reached overbought conditions before cooling off. After peaking above 80, it has since declined, suggesting that some selling pressure has emerged. Despite this pullback, the RSI remains in bullish territory, indicating that overall momentum is still positive.

Recent Candle Activity

The last five candles show a mix of small-bodied formations with wicks on both sides, signaling some indecision in the market. This could mean that traders are assessing whether the stock has more room to run or if a short-term correction is needed. The presence of upper wicks in recent candles suggests that sellers have stepped in near higher levels, putting some pressure on further upside movement.

Analyst Ratings

📊 Genpact Limited (NYSE: G) has recently seen a mix of analyst upgrades and downgrades, reflecting different views on the company’s outlook.

🔼 Upgrades

🟢 January 21, 2025 – Jefferies Financial Group upgraded Genpact from hold to buy, raising the price target from $44 to $55. Analysts pointed to strong financial performance and the company’s growth in digital transformation services as key reasons for the positive rating.

🟢 February 7, 2025 – TD Cowen also upgraded the stock, moving it from hold to buy and increasing the price target from $45 to $60. The upgrade was based on confidence in Genpact’s strategic initiatives and expanding market presence, which are expected to drive continued growth.

🔽 Downgrades

🔴 December 15, 2023 – Baird downgraded Genpact from outperform to neutral with a price target of $38. The downgrade was driven by concerns over market saturation and rising competition in the business process outsourcing sector.

🔴 August 22, 2023 – JPMorgan revised its rating from neutral to underweight, keeping a price target of $40. Analysts cited valuation concerns and potential headwinds in Genpact’s core business segments as factors behind the downgrade.

🎯 Consensus Price Target

📌 The latest consensus 12-month price target for Genpact stands at $58.56, with estimates ranging from $55 to $65. This suggests analysts see an upside potential of around 13.40% from the current stock price.

🔍 With differing opinions from analysts, the stock remains under close watch as investors weigh its growth potential against industry challenges.

Earnings Report Summary

Genpact Limited wrapped up 2024 with solid financial results, showing steady growth across its business segments. The company continues to build momentum in digital transformation and AI-driven services, which played a big role in its strong performance this past year.

Fourth Quarter Highlights

In the final quarter of 2024, Genpact brought in $1.25 billion in revenue, marking a 9% increase from the previous year. A big portion of that came from its Data-Tech-AI services, which pulled in $595 million, up 12% year-over-year. Digital Operations wasn’t far behind, generating $654 million, a 7% improvement from the previous year.

Profitability remained strong, with gross profit hitting $431 million and an 11% net income margin. Operating income came in at $182 million, up 10% from last year, while adjusted operating income reached $213 million. Diluted earnings per share rose 16% to $0.74, and the company’s adjusted EPS climbed 12% to $0.85.

Cash flow also improved, with $228 million generated from operations in the quarter, a solid increase from the previous quarter. The company continued returning value to shareholders by repurchasing 1.9 million shares for about $75 million, with an average buyback price of $38.72 per share.

Full-Year 2024 Performance

For the full year, revenue grew 6.5% to $4.74 billion. The Data-Tech-AI business was a standout, contributing $2.3 billion, an 8% increase, while Digital Operations added $2.44 billion, up 5% from the previous year.

Gross profit for the year totaled $1.68 billion, keeping the margin at a healthy 35.4%. Net income jumped 79% to $631 million, partly thanks to a one-time tax benefit from intellectual property transfers. Without that, growth would still have been strong. Operating income was up 26% at $631 million, and adjusted operating income landed at $763 million, a 6% improvement.

Earnings per share made a big leap, rising 81% to $3.41. Even adjusting for one-time factors, EPS was up 9% to $2.98. The company also locked in $4.9 billion in new business for the year, a significant 26% jump, and generated $491 million in operating cash flow.

Looking Ahead

Genpact expects the momentum to continue into 2025. For the first quarter, it’s guiding for revenue between $1.22 billion and $1.23 billion, representing growth of around 7%. For the full year, revenue is projected to land between $4.74 billion and $4.75 billion, with growth in both Digital Operations and Data-Tech-AI services. Margins are expected to hold steady, with a gross margin of 35.4% and an adjusted operating income margin around 17%.

The company’s ability to expand its digital services while maintaining strong financials keeps it in a solid position heading into the next phase of growth.

Financial Health and Stability

A company’s ability to pay and grow dividends ultimately depends on its financial health. Looking at Genpact’s balance sheet and profitability metrics, there are several positive indicators:

• Revenue Growth: Over the past year, Genpact’s revenue has grown to $4.77 billion, reflecting an 8.9% year-over-year increase.
• Profitability: The company maintains a solid operating margin of 14.98% and a net profit margin of 10.77%, demonstrating efficiency in managing costs.
• Return on Equity: With an ROE of 22.15%, Genpact is effectively using shareholder capital to generate returns.
• Debt Position: The total debt sits at $1.45 billion, with a debt-to-equity ratio of 60.47%. While this is not excessively high, it’s something to monitor.

The company’s financials are in good shape, with strong cash flow and profitability. The manageable debt levels ensure that dividend payments are not at risk, even in times of economic uncertainty.

Valuation and Stock Performance

• Current Stock Price: $51.29
• 52-Week Range: $30.23 – $56.76
• Price-to-Earnings (P/E) Ratio: 18.12
• Price-to-Book (P/B) Ratio: 3.80
• Enterprise Value/EBITDA: 11.55

Genpact has delivered solid stock performance over the past year, rising from its 52-week low of $30.23 to a high of $56.76. The current P/E ratio of 18.12 suggests that the stock is fairly valued relative to its earnings.

While not deeply undervalued, the stock’s consistent revenue growth and stable profitability support its current valuation. Investors looking for a mix of dividend income and growth potential may find it appealing at these levels.

Risks and Considerations

While Genpact has a strong dividend track record and solid financials, there are a few factors that investors should keep in mind:

• Economic Sensitivity: Since Genpact provides outsourcing and digital transformation services, its revenue depends on corporate spending. If businesses cut costs in an economic downturn, demand for its services could decline.
• Debt Levels: The company carries a debt-to-equity ratio of 60.47%. While this is manageable, rising interest rates could increase financing costs.
• Competitive Landscape: Genpact operates in a highly competitive industry alongside major players like Accenture and Cognizant. Staying ahead requires continuous investment in technology and service innovation.
• Stock Volatility: With a beta of 1.17, Genpact tends to move slightly more than the broader market, meaning it can be more volatile than traditional dividend stocks.

These risks don’t necessarily make the stock unattractive, but they are worth considering for investors who prioritize stability.

Final Thoughts

Genpact may not be the highest-yielding dividend stock, but it offers a combination of steady income, financial strength, and long-term growth potential. The company’s low payout ratio, strong cash flow, and history of dividend increases make it an appealing choice for investors who value stability.

With a reasonable valuation and a solid balance sheet, Genpact remains a reliable option for those looking for a mix of dividends and growth. While there are some risks, the overall fundamentals support the company’s ability to continue delivering shareholder value over time.