For investors looking for dependable income sources, dividend investing is a fundamental strategy centered on businesses that regularly provide value to shareholders. One organized method for finding good dividend stocks uses filters for businesses with good dividend traits while keeping sound basic business operations. This system favors stocks with good dividend scores that also show acceptable profitability and financial condition, forming a balanced method that looks for both income and steadiness. This filtering method assists investors in steering clear of the typical mistake of pursuing unreasonably high payouts from businesses with basic financial problems.
Dividend Profile Analysis
Quest Diagnostics Inc (NYSE:DGX) offers a strong case for investors focused on dividends, receiving a ChartMill Dividend Rating of 7 out of 10. The company's dividend traits show both steadiness and expansion possibility:
- Dividend Yield: 1.71% gives regular income while staying away from the very high payouts that can point to money troubles
- Dividend Growth: 6.92% average yearly expansion over recent times shows management's dedication to raising returns for shareholders
- Payment History: Steady dividend distributions for more than 10 years with no cuts in that time
- Payout Ratio: 36.03% of profits stands for a maintainable amount that keeps money for business investment
The mix of these points forms a dividend situation that balances present income with future expansion possibility, meeting the main goal of dividend investing: creating dependable, increasing income sources over the long term.
Profitability Assessment
The company's good profitability base backs its dividend continuity, getting a ChartMill Profitability Rating of 7. Important numbers show Quest Diagnostics' capability to produce steady profits:
- Return Metrics: Return on Assets of 5.95% and Return on Equity of 13.27% both place in the best group compared to similar companies
- Margin Strength: Operating margin of 14.71% and profit margin of 8.88% do much better than industry averages
- Cash Flow Generation: Steady positive operating cash flow supplies the needed cash for dividend distributions
These profitability figures are important for dividend investors since they show the company's ability to keep and raise dividend payments without weakening financial steadiness or expansion investments.
Financial Health Evaluation
With a ChartMill Health Rating of 5, Quest Diagnostics keeps satisfactory financial soundness to back its dividend promises:
- Solvency Position: Altman-Z score of 3.27 shows low failure risk and does better than 70% of industry rivals
- Debt Management: Debt-to-equity ratio of 0.71 stands for average borrowing within industry standards
- Liquidity Metrics: Current ratio of 1.13 and quick ratio of 1.04 give enough short-term money adaptability
While the company's cash ratios are behind some industry counterparts, the complete financial health view supports the dividend plan by making sure the company can handle economic changes while keeping payments.
Valuation and Growth Context
Trading at a P/E ratio of 19.60, Quest Diagnostics seems fairly priced compared to both the S&P 500 average of 25.45 and similar companies. The company displays stable expansion patterns with:
- Recent Performance: 13.74% sales expansion and 10.41% EPS expansion in the last year
- Historical Trends: 5.02% average yearly sales expansion and 6.58% EPS expansion over recent times
- Future Expectations: Analysts predict continued expansion of 4.83% in sales and 7.50% in EPS
This expansion path supports the dividend growth plan by making sure profit growth can pay for future dividend raises without stressing money supplies.
Complete Fundamental Assessment
The detailed fundamental analysis report gives more understanding into how Quest Diagnostics balances dividend traits with total business quality. The company's capability to keep good profitability while giving capital back to shareholders through a growing dividend makes it worth looking at for portfolios focused on income.
For investors wanting to look into similar possibilities, the Best Dividend Stocks screen supplies other choices that fit these balanced standards for dividend investing.
Disclaimer: This analysis is built on fundamental data and filtering standards for information only. It does not form investment guidance, and investors should do their own investigation and think about their personal money situations before making investment choices. Past results do not assure future outcomes, and dividend payments depend on company decisions and market situations.
