Free Trial

Infosys (NYSE: INFY); The Stock That Offers 60% Annual Returns And A Dividend

Infosys (NYSE: INFY); The Stock That Offers 60% Annual Returns And A Dividend
Infosys (NYSE: INFY), the $70 billion Indian multinational, has had a year of years, and there are still ten weeks to go in 2020. Their American Depository Receipts (ADR) shares are up more than 25% this month alone and up a full 140% since March. Not bad for a company reporting revenue growth in the low single digits.

But perhaps that’s what makes the stock so attractive to long term investors and Wall Street. The old adage of “no trader who always booked profits ever went bust” seems to hold true on a large scale as well. Infosys is the epitome of the reliable company every investor should consider in their portfolio.

They provide a range of digital consulting and IT outsourcing services and are the second-largest Indian IT company after Tata Consulting. Not only have they been able to offer impressive capital appreciation in recent months, but they also offer solid fundamentals to entice the more traditional investor as well as a dividend.

Solid Fundamentals

Their fiscal Q2 numbers which came out before yesterday’s session showed revenue growing almost 3% year on year as that and EPS also came in higher than analysts expected. The latter alone was up 20% year on year. While core revenue might have contracted 11%, solid performance from their digital revenue segment helped soften the blow as that saw 27% year on year growth.

Management were impressed enough with the numbers to announce an interim dividend that was up 50% on the year. This kind of move is considered to be one of the most bullish signals a company can offer investors and speaks volumes to their level of confidence in being able to continue delivering results. On a similar note, they also feel comfortable enough to be able to increase salaries in the new year, something that is unimaginable for a lot of non-IT companies out there right now.

CEO Salil Parekh struck an unsurprisingly bullish tone with the release when he said “our second quarter performance is a clear reflection of our ability to help clients on their digital transformation journeys. Our digital and cloud capabilities combined with intense client relevance are helping us achieve differentiated results in the market as is visible in 2.2% year on year overall revenue growth and 25.4% growth from digital offerings, which now are at 47.3% of revenues. Increase in revenue and margin outlook for FY 21 is due to the continued trust clients have in us. I am extremely proud of our team for achieving these results in challenging business conditions globally.”

Busy With Acquisitions

Recent headlines have given the company lots of attention and going off the share price, it’s been the right kind. Earlier this month, Infosys announced the acquisition of Blue Acorn iCi which will strengthen Infosys’ integration capabilities with the likes of Adobe and Shopify. It will also make them more attractive to CMOs and bolster their e-commerce brochure. The previous week, they announced the acquisition of GuideVision which will enhance their digital cloud services.

In early September, the company purchased Kaleidoscope Innovation, a product development firm which operates in medical, consumer, and industrial markets. As Infosys President Ravi Kumar said with the news; "this acquisition further strengthens our digital offerings at the intersection of new software technologies and medical devices - a sector that is expected to witness significant investments and consumerization in the post-COVID era”.

Seeing a trend yet? The company has been positioning themselves as the go-to consulting firm across a wide range of relevant industries and markets and is poised to continue capturing market share in the coming months. It looks like Wall Street has been in on the game for a while judging by the stock’s performance which is not even starting to look tired.

Investors thinking about getting involved should be conscious of the extended RSI, but consider any pull back from current prices to be a solid buying opportunity.

Infosys (NYSE: INFY); The Stock That Offers 60% Annual Returns And A Dividend

Should you invest $1,000 in Infosys right now?

Before you consider Infosys, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Infosys wasn't on the list.

While Infosys currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

(Almost)  Everything You Need To Know About The EV Market Cover

Click the link below and we'll send you MarketBeat's guide to investing in electric vehicle technologies (EV) and which EV stocks show the most promise.

Get This Free Report
Sam Quirke
About The Author

Sam Quirke

Contributing Author

Technical Analysis

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Infosys (INFY)
2.2295 of 5 stars
$21.96-0.1%1.91%28.15Hold$20.85
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Recent Videos

These Top Stocks in 2024 Will Continue to be Big Winners in 2025
’Best Report in 2 Years’: NVIDIA Earnings Crushes Expectations Again
Palantir and the NASDAQ 100: What’s the Next Big Stock Swing for This AI Giant?

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines