Covered, net cash, and raised every year since it started paying. Cognizant paid $591 million of dividends from $2,013 million of free cash flow in fiscal 2025, 29.4%, a pass, and holds net cash: $2,231 million of cash against $908 million of debt. The quarterly rate has risen every year since payments began, to $0.33 in February 2026, up 6.5%. The 1.96% trailing yield clears the sub-1% line and every check passes, so the card is graded good.
Key risk: Services revenue follows enterprise IT budgets — a spending freeze slows the cash flow that funds both the dividend and the buyback.
Changes if: The free-cash-flow payout crosses 60%, or the dividend is cut.
- ✓Cash-flow cover 29.4% of FY2025 free cash flow, pass (<60%).
- ✓Leverage Net cash, pass (<3x).
- ✓Growth record Raised every year since payments began; no cut in the record shown.
- ✓Trap screen Yield 1.96%, no cut, payout under 100%; not a trap pattern.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.