Booz Allen Hamilton (NYSE:BAH) Emerges as a Top Dividend Stock After Rigorous Screening

Booz Allen Hamilton Holding Corp (NYSE:BAH) has appeared as an attractive option for dividend investors after completing a strict screening process made to find high-quality dividend-paying stocks. This screen focuses on companies with good dividend traits while making sure they keep sound profitability and financial condition, important factors for lasting income generation. The method uses minimum limits for volume, price, and scores across health, profitability, and dividend measures, with BAH matching or going beyond these standards, specifically getting a dividend score of 7 and a profitability score of 8.

Dividend Strength and Sustainability

Booz Allen Hamilton is notable for its dependable and increasing dividend, which is a main part of its attraction for income-oriented investors. The company has built a history of steady payments and raises, upholding a yield that is strong against its industry.

• Dividend Yield: At 2.12%, BAH's yield is higher than the industry average of 2.07% and is near the S&P 500's average, placing it well for investors looking for income without high risk.
• Dividend Growth: The dividend has increased at a notable yearly rate of 14.89% over the last five years, showing management's dedication to giving value to shareholders.
• Payout Ratio: With just 22.65% of earnings given out as dividends, the company keeps enough capital to put back into growth while keeping dividend continuity, although investors should be aware that earnings growth has been slower than dividend growth lately.

These qualities are important for the screening plan, as they show both present income possibility and the chance of ongoing dividend dependability, a basic part of dividend investing.

Profitability and Operational Efficiency

BAH's sound profitability is the foundation for its capacity to continue and raise dividends. The company is very good at creating returns from its assets and equity, which is necessary for long-term dividend safety.

• Return Metrics: The firm has a return on equity of 112.58% and a return on invested capital of 21.24%, both placed in the top group of the professional services industry, showing effective use of capital.
• Margins: Operating margins of 10.44% and profit margins of 8.04% have gotten better over the last few years, adding to good cash flow creation that backs dividend payments.

High profitability is a main part of the screening process because it lowers the chance of dividend reductions in economic declines and gives a cushion for future raises.

Financial Health Considerations

While BAH's financial health score of 5 points to some issues, the company stays on firm ground generally, with positive points that balance its greater debt amounts.

• Solvency: An Altman-Z score of 4.89 points to low bankruptcy risk, and the company’s return on invested capital is well above its cost of capital, showing value creation.
• Liquidity: Current and quick ratios of 1.78 show enough short-term liquidity, although the debt-to-equity ratio of 3.66 is high and needs watching.

The screening rules include a lowest health score to steer clear of companies with major financial uncertainty, and BAH meets this requirement even with its leverage, because of good cash flow and profitability.

Valuation and Growth Outlook

BAH is fairly priced compared to similar companies and the wider market, trading at a P/E ratio of 15.75 against the industry average of 21.45. Future growth is anticipated to be moderate, with EPS and revenue forecast to grow each year at 6.82% and 2.86%, in that order. This steady growth view supports the argument for steadiness instead of fast growth, matching the goals of dividend investors who value consistency over high growth.

For a complete breakdown of these measures, readers can see the full fundamental analysis report.

Conclusion

Booz Allen Hamilton shows a balanced choice for dividend investors, providing a appealing yield, good growth history, and very good profitability. While its debt amounts need observation, the company’s operational effectiveness and cash flow creation give assurance in its capacity to maintain dividends. As a piece of a varied income portfolio, BAH deserves thought for those looking for dependable passive income from a long-standing firm.

For investors wanting to look into comparable dividend stock chances, the Best Dividend Stocks screen provides a selected list of companies that meet these strict rules.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation before making any investment decisions.