CF Industries Holdings Inc. (NYSE:CF) Screens as a Top Dividend Stock with Strong Fundamentals

For investors aiming to build a portfolio centered on reliable income, a disciplined screening process is important. One useful method is to look for companies that not only provide an appealing dividend now but also have the fundamental financial soundness to maintain and possibly raise those payments over time. This requires looking past the headline yield to evaluate the sustainability of the payout through profitability measures and the general condition of the balance sheet. A stock that performs well across these areas, dividend quality, profitability, and financial health, represents a strong candidate for a long-term dividend-centered strategy.

CF Industries Holdings Inc. (NYSE:CF), a top global manufacturer of nitrogen fertilizers, appears as a notable result from this type of screening method. The company’s fundamental profile indicates it matches the central principles of careful dividend investing.

A Sound Dividend Profile

The attraction for income investors starts with CF Industries' dividend traits, which are made for consistency and increase rather than just a high fixed yield.

• Fair and Competitive Yield: The company now provides a dividend yield near 2.54%. This yield is greater than the present average for the S&P 500. For dividend investors, a maintainable and rising payout often matters more than a high yield that could be in danger.
• History of Increase: CF Industries has built a consistent history of returning capital to shareholders. It has distributed dividends for at least ten years without a cut, establishing a record of dedication. More notably, it has raised its dividend at an average yearly rate of almost 11% over the last five years, showing a priority on boosting shareholder income over time.
• Maintainable Payout Ratio: A vital check for any dividend stock is the payout ratio, the part of earnings given as dividends. CF’s ratio is at a very workable 24.22%, showing the company keeps most of its profits. This low payout ratio gives an important cushion, confirming the dividend is easily paid from earnings and allows much space for putting money back into the business or future dividend raises.

Basic Financial Soundness

A lasting dividend is supported by a company’s operational results and firm financial foundation. This is where CF Industries’ screening results indicate notable firmness, directly backing the maintainability of its income payments.

• High Profitability: The company receives a top ChartMill Profitability Rating of 9. Its profit margin above 20% and operating margin over 31% place it with the best in the chemicals industry. Strong profitability is key for dividend investors because it shows the company’s core business is very efficient and produces solid cash flows, the real origin of dividend payments.
• Firm Financial Condition: With a ChartMill Health Rating of 7, CF Industries shows a durable balance sheet. Important liquidity measures, like a current ratio above 2, indicate the company can easily meet its near-term duties. Also, its debt amount compared to its large free cash flow is seen as very good, meaning it could in theory clear all its debt in under two years using its cash flow. This financial steadiness lowers risk and gives assurance that the company can keep its dividend during different economic periods.

Valuation and Growth Setting

From a valuation view, CF Industries seems fairly valued. Its price-to-earnings ratio is lower than both its industry group and the wider market, implying investors are not paying too much for its earnings and dividend stream. While analyst forecasts for future earnings and sales increase are moderate, the company’s recent performance has been good, with notable growth in earnings per share over the past year.

Investors should note the cyclical character of the agricultural inputs business, as fertilizer demand and prices can change with commodity cycles and worldwide farming patterns. However, the company’s high margins, clear balance sheet, and careful capital return policy are made to help manage this variation.

A complete summary of these fundamental points is provided in the full ChartMill Fundamental Analysis Report for CF.

Finding More Possibilities

CF Industries shows the kind of company a disciplined dividend screen can find, one with an increasing, well-supported dividend backed by high profitability and a sound balance sheet. For investors wanting to build or improve a dividend portfolio, this method can effectively find a list of possible choices that deserve more study.

The screen that identified CF Industries is made to filter for stocks with high dividend ratings while making sure basic firmness in profitability and financial condition. You can see the present results of this "Best Dividend" screen and find other qualifying companies by clicking here.

---

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis is based on current data and past performance, which is not indicative of future results. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.