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Will Dividend Payment Policy Change Help Accenture Shareholders?

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The new dividend payment policy

Accenture’s (ACN) board of directors decided to change its existing semi-annual dividend payment policy to a quarterly schedule beginning in the first quarter of fiscal 2020. The change seems attractive to investors. The company has paid regular dividends twice a year and has also raised its dividend each year. In the fourth quarter of fiscal 2018, Accenture hiked its semi-annual dividend by 10% to $1.46 per share. At the end of fiscal 2018, the company returned around $1.7 billion in dividends as compared with nearly $1.6 billion in the prior year.

The graph above shows the increasing dividend payment trend in the last five years for Accenture. During this timeframe, the company paid a total of $5.6 billion in dividends at an average of nearly $1.1 billion every year. This strong dividend payment policy continues to drive shareholder wealth.

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Dividend yield and peer comparison

The dividend yield for the company currently stands at 1.54%. The current dividend yields of other software players like IBM (IBM), Oracle (ORCL), and Microsoft (MSFT) stood at 4.1%, 1.54%, and 1.48%, respectively.

At the end of fiscal 2018, the free cash flow of the company stood at $5.4 billion against $4.5 billion in fiscal 2017. The strong free cash flow generation coupled with lower leverage may encourage Accenture to sustain such a strong dividend payment policy going forward.

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