Baker Hughes Co (NASDAQ:BKR) Emerges as a Strong Dividend Pick with Steady Growth and Solid Fundamentals

Baker Hughes Co (NASDAQ:BKR) appears as an option for dividend investors after meeting criteria in a screening process aimed at finding stocks with good dividend traits while keeping solid profitability and financial stability. The screen looks for companies with a ChartMill Dividend Rating of 7 or higher, confirming they have steady payouts, reasonable yields, and consistent growth. Further criteria include a minimum ChartMill Profitability Rating of 5 and a Health Rating of 5, ensuring the company is financially secure enough to uphold its dividend policy. This method balances income potential with fundamental strength, lowering the chance of falling into high-yield traps where dividends could be unstable.

Dividend Performance and Stability

Baker Hughes Co performs well in key areas important to dividend investors:

• Dividend Yield and Growth: BKR currently provides a 2.14% dividend yield, slightly under the industry average of 3.85% but close to the S&P 500’s 2.40%. While the yield isn’t the highest, the company makes up for it with consistency—it has paid dividends for 10 straight years without cuts, showing a dedication to shareholders. The dividend has increased at an annual rate of 4.36%, a steady but manageable pace.
• Payout Ratio: A key measure for dividend stability, BKR’s payout ratio is 28.64%, far below the warning level of 80%. This means the company keeps enough earnings to fund growth while easily covering dividend payments.
• Earnings Support: Dividend growth is supported by rising earnings, with EPS up by 30.05% over the past year and expected to grow at 8.23% per year in the future. This link between earnings and dividend growth lowers the risk of future reductions.

For more details on BKR’s fundamentals, see the full Fundamental Analysis Report.

Profitability and Financial Strength

While the screen focuses on dividends, it also checks that companies remain profitable and financially healthy:

• Profitability: BKR’s ChartMill Profitability Rating of 7 shows strong margins and returns. The company has a 17.22% Return on Equity (better than 82% of peers) and an 11.04% Profit Margin (ahead of 79% of the industry). These numbers point to efficient operations that can maintain payouts.
• Financial Health: With a ChartMill Health Rating of 5, BKR displays a mixed but acceptable profile. Its Debt/Equity ratio of 0.34 is reasonable, and the company produces enough free cash flow to handle debts (Debt-to-FCF of 2.79). However, liquidity measures like the Quick Ratio of 1.00 trail industry averages, requiring attention.

Why These Standards Are Important

The screening approach focuses on dividend dependability over high yield, steering clear of companies where large payouts might not last. By demanding solid profitability and financial health, it removes firms at risk of slashing dividends during tough times. BKR’s mix of a steady, growing dividend, strong earnings backing, and enough financial cushion fits this strategy, making it a reasonable pick for income-focused investors.

For those looking for more dividend stock ideas, check out the full Best Dividend Stocks Screen, which uses the same strict criteria to find other opportunities.

Disclaimer: This article is not investment advice. Always do your own research and consider your financial goals before making investment decisions.