Quest Diagnostics Inc. (NYSE:DGX) Stands Out as a Dependable Dividend Stock

For investors aiming to create a portfolio that produces steady passive income, a systematic selection process is important. One useful technique is to concentrate on stocks that provide a good dividend now and also show the financial capacity to keep and increase those payments in the future. A realistic method includes selecting for firms with a strong total dividend score, which combines yield, increase, and safety, while also checking they have good profitability and firm financial condition. This plan tries to sidestep the dangers of high-yield traps, companies whose large payments could be in danger from poor basics, and instead finds businesses constructed to give regular income across different market periods.

Quest Diagnostics Inc. (NYSE:DGX), a top provider of diagnostic testing and information services, appears as a candidate from this kind of selection process. The company's basic profile indicates it could deserve more attention from dividend-oriented investors. We will look at how its main measurements fit the standards of a sound dividend investment plan.

Dividend Dependability and Increase

The center of any dividend investment is the payment itself. For Quest Diagnostics, the dividend narrative is marked by dependability and consistent increase, which are important for long-term income accumulation.

• History: The company has given a dividend for at least 10 straight years and has not lowered it in that time. This long record offers some assurance in management's dedication to giving capital back to shareholders.
• Maintainable Increase: The dividend has increased at a yearly rate of about 6.92% over the last five years. Significantly, this increase rate is said to match the company's earnings increase, implying the rises are backed by basic business results rather than being a financial stretch.
• Yield Perspective: With a present dividend yield of 1.76%, DGX provides a yield that is much higher than the industry average of 0.57%, putting it in the high group of its field. While a bit under the present S&P 500 average, the yield is joined by the company's good increase history, making it a rounded option for total return.

These elements together build the company's high ChartMill Dividend Score. A dependable and increasing dividend is the main aim of the plan, and DGX's history straightly backs that goal.

Profitability: The Source for Payments

A company can only maintain and increase its dividend if it is regularly profitable. This is why selecting for good profitability is a required part of the method. Quest Diagnostics shows firm profitability measurements that support its dividend policy.

• Good Returns: The company displays satisfactory returns on capital, with a Return on Invested Capital (ROIC) of 8.79%, doing better than 77% of similar firms in the Healthcare Providers & Services field. Its Return on Equity (ROE) of 13.27% is also firm.
• Satisfactory Margins: Quest Diagnostics keeps strong profit margins, including an operating margin of 14.71%, which places better than 88% of industry rivals. This operational effectiveness is a main origin of the cash required to pay for dividends.
• Payment Maintainability: The dividend payment ratio is at a manageable 36.03% of net income. This is a key number; it shows the company is giving back a notable part of profits to shareholders while keeping most to put back into the business, reduce debt, or handle economic slumps. A low payment ratio is a cushion that helps secure the dividend's protection.

This profitability picture supports the company's good ChartMill Profitability Score and is precisely the type of financial source the selection plan looks to find, one that can dependably supply dividend payments each year.

Financial Condition: Securing Long-Term Firmness

Financial condition is the base that backs both profitability and dividend maintainability. A company with too much debt or poor cash availability is at higher risk of reducing its dividend during a problem. The selection process needs a minimum level of condition to lessen this risk.

Quest Diagnostics shows a varied but generally okay view of financial condition, which matches the "decent" level used in the screen.

• Solvency is Satisfactory: The company's Altman-Z score of 3.24 shows no near-term bankruptcy risk and is better than 67% of its industry peers. Its debt amounts, while existing, seem controllable. The Debt-to-Equity ratio of 0.71 displays some use of debt financing but is similar to the industry average.
• Liquidity is a Note: The analysis states that DGX's Current and Quick ratios, while within a normal span, are on the lower end compared to industry rivals. This implies investors should watch the company's short-term cash position, though it is not now at a serious level.

The company's ChartMill Condition Score mirrors this mix of satisfactory solvency against closer liquidity. For the dividend selection plan, the aim is to filter out companies with serious financial flaws, and DGX's total condition picture meets that starting need.

Price and Increase Points

While the main concentration is on income, price and increase outlook give important setting for the total return possibility of the investment.

• Price: Compared to the wider market and its own industry, DGX's stock does not seem overly costly. Its Price-to-Earnings (P/E) ratio of 18.86 is less expensive than 74% of its industry peers and under the present S&P 500 average.
• Increase View: The company is projected to give slight but steady increase in the next years, with analysts predicting yearly EPS increase near 7.6%. This expected increase backs the chance for continued, maintainable dividend rises.

For a complete summary of all these basic elements, you can see the full ChartMill Fundamental Analysis Report for DGX.

Summary

Quest Diagnostics Inc. offers an example of using a systematic dividend selection plan. The company fits the central standards: a dependable and increasing dividend backed by strong profitability and an okay level of financial condition. Its good yield compared to the field, along with a long history of payments and a maintainable payment ratio, makes it a candidate for investors creating a portfolio for income. As with any investment, it is not without points to note, such as its liquidity measurements, but the total picture fits the aim of finding lasting dividend payers.

This review of DGX came from a mechanical screen for high dividend scores combined with good profitability and condition. This method can find many possible chances. If you want to examine other stocks that meet similar filters for dividend investing, you can use the Best Dividend Stocks screen yourself.

Disclaimer: This article is for information only and does not make up financial guidance, a suggestion to buy or sell any security, or a support of any investment plan. Investors should do their own study and think about their personal financial situation and risk comfort before making any investment choices.