The S&P/ASX 200 Index (ASX: XJO) stock TechnologyOne Ltd (ASX: TNE) has an impressive record of dividend growth over the past decade.
Its 2023 annual dividend per share was 248% bigger compared to the payout in 2013. There aren't many ASX 200 stocks that can boast of a record like that.
I wouldn't call it a strong option for passive income in the short term because of the low dividend yield. But, if the business is able to keep growing its payout at a double-digit rate in percentage terms it can compound to a much bigger number in the long-term.
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TechnologyOne recently reported its FY23 result which included profit before tax growth of 16%, which was better than the guidance of growth of between 10% to 15%. Net profit after tax (NPAT) also grew by 16%, to $102.9 million.
This profit growth enabled the board of the ASX 200 stock to increase its annual payout to 19.52 cents per share.
The final dividend of FY23 for owners of TechnologyOne shares is 14.9 cents per share.
It has an ex-dividend date of 30 November 2023, which means that investors have until the end of trading today to own shares to gain entitlement to the dividend because the ex-dividend date is the day that prospective investors miss out on the upcoming dividend. So, investors need to be quick if they want a piece of this passive income!
This dividend will be paid on 15 December 2023, so only a few weeks to go.
How big could the payouts from the ASX 200 dividend stock become?
The broker UBS is currently forecasting that the dividend per share could grow every year between FY24 to FY28. In FY24 the annual dividend per share could be 22 cents and by FY28 it could reach 39 cents per share. That implies the annual payout could double between FY23 to FY28.
This dividend growth could occur because the earnings per share (EPS) is forecast to double between FY23 to FY28, to 65 cents per share.
That suggests the TechnologyOne share price is valued at 24 times FY28's estimated earnings, which isn't exactly cheap considering how far away that is.
