Baker Hughes Co (NASDAQ:BKR): A Top Dividend Stock with Strong Sustainability and Growth

Baker Hughes Co (NASDAQ:BKR) appears as a notable option for dividend investors employing a strict screening method. The selection process centers on finding companies with strong dividend traits while keeping sufficient financial condition and earnings, important factors that support continued payments. Stocks need to show a minimum ChartMill Dividend Rating of 7, together with earnings and condition ratings of at least 5, removing companies with poor foundations or unmaintainable distributions. This multi-factor method aids investors in steering clear of high-yield pitfalls and focusing on companies able to uphold and raise dividends over time.

Dividend Strength and Sustainability

Baker Hughes is notable with a firm dividend profile, shown by its ChartMill Dividend Rating of 7. The company provides a yield of 2.02%, which is near the S&P 500 average and shows a dedication to giving value to shareholders. Most significantly, the sustainability measures are positive:

• A payout ratio of 28.64% shows that only a small part of earnings is used for dividends, leaving plenty of space for reinvestment and protection from earnings changes.
• The dividend has increased at a yearly rate of 4.36% over recent years, backed by a history of steady payments and no decreases for at least ten years.
• Earnings growth has been higher than dividend growth, creating a base for future raises without stressing financial means.

These parts are vital for dividend-centered plans, as they lower the chance of reductions and aid long-term income increase, matching the screening focus on dependability and sustainability.

Profitability and Operational Efficiency

The company’s earnings, scored 7 by ChartMill, supports its capacity to maintain dividends. Important measures consist of:

• Return on equity of 17.22% and return on invested capital of 11.38%, both placed in the top group of the energy equipment and services industry.
• A profit margin of 11.04%, doing better than 80% of industry competitors, along with better operating and gross margins over recent periods.
• Positive earnings and operating cash flow over the last year, strengthening financial steadiness.

High earnings are necessary for dividend plans because they confirm that payments are supported by real earnings ability instead of debt or temporary profits, lowering the chance of future reductions.

Financial Health Considerations

With a ChartMill Health Rating of 5, Baker Hughes shows a varied but mostly acceptable financial state. Positive aspects involve:

• A workable debt-to-equity ratio of 0.34, showing a balanced capital setup.
• A firm debt-to-free-cash-flow ratio of 2.79, suggesting the company might pay off its debt in less than three years with present cash flow.
• Decrease in debt compared to assets over the last year, indicating active balance sheet care.

Still, liquidity measures show some softness, with current and quick ratios under industry averages. While this needs watching, it is balanced by high cash flow creation and solvency signs, making sure the company stays able to meet its duties, a needed state for dependable dividend payments.

Valuation and Growth Context

Baker Hughes trades at a P/E ratio of 17.93, which is about even with industry competitors but under the S&P 500 average. Growth outlooks are average, with EPS predicted to rise by 8.01% each year, although revenue growth is estimated at a lower speed. For dividend investors, valuation is less important than sustainability and yield dependability, but the present price does not seem too high relative to the company’s financial quality.

Conclusion

Baker Hughes presents a balanced choice for dividend investors, mixing a good yield with high earnings, acceptable financial condition, and a maintainable payout ratio. Its steady dividend history and earnings growth give trust in its capacity to continue distributions, fitting the main ideas of dividend investing.

For investors looking for like chances, the Best Dividend Stocks screener provides a selected list of high-quality dividend payers. More detailed review of Baker Hughes is available in its fundamental report.

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 investment decisions.