Accenture has announced a significant increase in its quarterly dividend, raising it by 10.1% to $1.63 per share as of February 13, 2026. Despite this positive development, the company faces challenges, with its stock experiencing a 41% decline over the past year. Furthermore, Accenture’s revenue growth forecast for fiscal 2026 is projected to slow down to between 2% and 5%, down from 7.3% in the previous quarter.
The consulting giant’s robust dividend growth reflects its commitment to returning value to shareholders. The increase from $1.48 to $1.63 per share starting in the third quarter of fiscal 2025 translates to an annualized payout of $6.22, marking a 12.1% year-over-year increase. Over the last five years, Accenture has delivered an impressive 85.1% growth in dividends, with a remarkable 510.8% increase over the past decade. This consistency places Accenture among the most reliable dividend payers in the technology sector.
Strong Cash Flow Supports Dividend Sustainability
The sustainability of Accenture’s dividend is underpinned by its strong cash generation capabilities. In fiscal 2025, the company reported operating cash flow of $11.47 billion, a rise from $9.13 billion in the previous year. After accounting for $600 million in capital expenditures, Accenture’s free cash flow reached $10.87 billion. This figure significantly exceeds the total dividend payments of $3.70 billion, providing a coverage ratio of 2.94 times, which offers a substantial safety margin for future growth.
Accenture’s capital intensity remains low, with capital expenditures representing just 5.2% of operating cash flow. This characteristic distinguishes professional services firms like Accenture from capital-heavy industries. The company’s payout ratio stands at 53.8%, well below the typical 60-70%% threshold, indicating ample room for future dividend increases.
Despite the positive outlook for dividends, Accenture’s stock valuation presents a complex picture. The stock currently trades at 20 times trailing earnings, having fallen from a 52-week high of $383.40. Analysts maintain an average target price of $292.42, suggesting a potential 30% upside from current levels. However, the stock has underperformed compared to the S&P 500, which has gained 14.8% over the past year.
Future Prospects and Strategic Contracts
While the stock’s performance raises concerns, Accenture is securing substantial contracts that could bolster future growth. Notably, the company has been awarded a position on the U.S. Department of Veterans Affairs Electronic Health Record Modernization program, a multi-billion dollar project that cements its role as a key partner in large-scale digital transformations. Accenture Federal Services also won a $1.4 billion task order to enhance the Army Corps of Engineers’ cybersecurity systems, although this award is currently being challenged by a competitor.
Additionally, Accenture’s partnership with Palantir Technologies on sovereign AI data centers in EMEA positions the firm in a rapidly growing market. Analysts at UBS have identified Accenture as a primary beneficiary of increasing generative AI spending, as companies ramp up consulting budgets to implement AI initiatives. The firm’s profitability remains robust, with a 10.8% profit margin and a 25% return on equity.
Beyond dividends, Accenture is actively engaging in stock repurchases, having bought back $4.62 billion of shares in fiscal 2025. This initiative has contributed to a total shareholder return of $8.32 billion, equating to approximately 71.6% of operating cash flow. The company ended the most recent quarter with $11.48 billion in cash and possesses a $5 billion share buyback authorization, providing flexibility to either accelerate buybacks or pursue strategic acquisitions.
Institutional investors continue to show confidence in Accenture, with ING Groep recently increasing its stake by 219.3% to 141,196 shares valued at $34.8 million. The analyst community maintains a moderate buy rating, with a mix of strong buy ratings, buy ratings, holds, and few sells.
Accenture’s dividend scorecard reflects strong fundamentals. Despite recent stock underperformance, the company earns an overall ‘A’ grade for its dividend strategy, supported by a solid cash flow coverage ratio of 2.94 times. While the current yield of 2.6% is above the S&P 500 average, it lags behind other technology dividend payers like IBM, which offers a 2.3% yield.
The path forward for Accenture hinges on its ability to navigate valuation challenges and meet growth expectations. The current forward P/E ratio of 17.5, based on fiscal 2026 earnings guidance of $13.19 to $13.57 per share, seems reasonable for a company with strong capital returns and a growing dividend. However, achieving revenue growth beyond the projected 2-5% range will be crucial.
For dividend-focused investors, Accenture represents a nuanced case. While the dividend itself merits a solid B+ grade for its safety and growth potential, the total return outlook is contingent on the firm’s ability to capitalize on opportunities in generative AI consulting while mitigating the decline in traditional IT services spending. The coming quarters will be pivotal in determining whether Accenture can deliver not only on its dividend commitments but also on the stock price appreciation that income investors seek.
