<div id="readability-page-1">Money Markets Analyzing Amdocs’ Dividend Growth Potential  ByDavid Trainer ,  Contributor.  Forbes contributors publish independent expert analyses and insights. #1 stock picker for 51 straight months on SumZero. AI is my edge. for  Great Speculations Follow Author Nov 18, 2025, 01:05pm EST Share Save Comment  Percentage sign on top of coin stacks before blue financial graph. Horizontal composition with copy space. Business and finance concept. getty Tesla shareholders recently approved Elon Musk’s $1 trillion pay package. The compensation plan has the potential to make the world’s richest person also the world’s first trillionaire. While that’s great for Musk, is it really the best use of Tesla’s capital, to mint a trillionaire, when the company is facing significant headwinds?  That’s about as rhetorical as a question can get…  Prudent use of capital doesn’t just apply to executive compensation. Mismanagement of capital can lead to reduced shareholder returns, in the form of reduced or suspended dividends. The most important element of a quality dividend stocks lies in ability to pay that dividend.  If a company’s cash flows aren’t enough to support its dividend payments, it can’t sustain or grow its dividends. On the other hand, companies that generate ample cash flows provide a safe income and have opportunities to further increase their dividends.  My Dividend Growth Stocks Model Portfolio includes stocks that get an Attractive-or-better rating and companies that not only produce ample free cash flow to support their dividend payments, but also consistently increase their dividend payments over time.  Below is an overview of one of the stocks from the latest edition of my Dividend Growth Model Portfolio.  MORE FOR YOU Free Stock Pick: Amdocs, Ltd. (DOX) Amdocs has grown revenue and net operating profit after-tax (NOPAT) by 2% and 4% compounded annually, respectively, since 2014. The company’s NOPAT margin improved from 12% in 2019 to 14% in the trailing-twelve-months (TTM), while invested capital turns fell from 1.0 to 0.9 over the same time. The improvement in NOPAT margin is enough to offset falling invested capital turns and drive return on invested capital (ROIC) from 11% in 2019 to 12% over the TTM.  Figure 1: Amdocs’ Revenue &amp; NOPAT Since 2014  DOX Revenue &amp; NOPAT 2014-TTM New Constructs, LLC Free Cash Flow Exceeds Dividend Payments Amdocs has increased its regular, quarterly dividend from $0.29/share in 3Q19 to $0.53/share in 3Q25. The quarterly dividend, when annualized, equals $2.12/share and provides a 2.5% dividend yield.  More importantly, Amdocs’ cumulative free cash flow (FCF) easily exceeds its dividend payments. From 2019 through the first nine months of 2025, Amdocs generated $2.9 billion (29% of current enterprise value) in FCF while paying over $1.3 billion in dividends. See Figure 2.  Figure 2: Amdocs’ FCF vs. Dividends Since 2019  DOX FCF vs. Dividends 2019-3Q25 New Constructs, LLC Companies with FCF well above dividend payments provide higher-quality dividend growth opportunities. On the other hand, dividends that exceed FCF cannot be trusted to grow or even be maintained.  DOX Is Undervalued At its current price of $84/share, DOX has a price-to-economic book value (PEBV) ratio of 1.0. This ratio means the market expects Amdocs’ NOPAT to never grow from TTM levels. This expectation seems overly pessimistic given that Amdocs has grown NOPAT by 5% and 4% compounded annually over the last five and ten years, respectively.  Even if Amdocs’s:  NOPAT margin remains at 14% (equal to TTM NOPAT margin) through 2034,  revenue grows at consensus rates in 2025 (-10%), 2026 (4%), and 2027 (5%), and  revenue grows 2% each year thereafter (equal five-year CAGR) through 2034, then  the stock would be worth $98/share today – a 17% upside. In this scenario, Amdocs’ NOPAT would grow just 3% compounded annually through 2034.  Add in Amdocs’ 2.5% dividend yield and a history of dividend growth, and it’s clear why this stock is in October’s Dividend Growth Stocks Model Portfolio.  Critical Details Found in Financial Filings by My Firm’s Robo-Analyst Technology Below are specifics on the adjustments I make based on Robo-Analyst findings in Amdocs’ 6-Ks and 20-Fs:  Income Statement: I made over $200 million in adjustments with a net effect of removing over $150 million in non-operating expense.  Balance Sheet: I made over $1 billion in adjustments to calculate invested capital with a net increase of over $300 million. The most notable adjustment was for accumulated goodwill amortization.  Valuation: I made over $1 billion in adjustments with a net decrease of just under $800 million to shareholder value. The most notable adjustment to shareholder value was total debt.  Editorial Standards Reprints &amp; Permissions LOADING VIDEO PLAYER... FORBES’ FEATURED Video</div>

<p>Amdocs (DOX) is highlighted in the latest Dividend Growth Model Portfolio for its strong dividend growth potential. The company has consistently increased its revenue and NOPAT since 2014, with a significant improvement in NOPAT margin. Amdocs' free cash flow exceeds its dividend payments, indicating high-quality dividend growth opportunities. Despite a current undervaluation, the stock shows a potential 17% upside, supported by a 2.5% dividend yield and a history of dividend growth.</p>