Accenture: Incredible Dividend Growth Stock, But Expensive Valuation
Accenture (NYSE:ACN) is a leader in the IT consulting and outsourcing space that has benefited greatly with the growing demand for IT services as well as cloud adoption and transitions.
Accenture's business is built on their relationships with their client businesses and the reputation that Accenture has developed over time. The truly amazing thing about Accenture is that they can count 75% of the global top 500 companies as clients. These are businesses that aren't exactly going to just disappear after a bad quarter or year which gives Accenture stability.
Accenture's technical knowledge and suite of solutions is no doubt what gets the clients, both new and old, to choose the company. However, it's the relationships they've cultivated as being the go-to solutions provider that keeps them coming back.
An interesting thing that we saw play out in 2020 was just how anti-fragile Accenture's business is. Obviously Accenture is at the forefront of the trend of IT consulting that is likely to continue to expand. However, what intrigues me most is that Accenture tends to do well during tough times in the economy and business slowdowns as their clients look for opportunities to be more fiscally or operationally efficient.
The bulk of my assets are invested in dividend-paying companies. Some carry higher yields than others; however, the point remains that I want the businesses I own to send a portion of profits back to me. While a lengthy dividend growth streak is not a guarantee that it's a high-quality company, I do think it narrows the possibilities down to the business likely to be high quality.