For investors aiming to build a portfolio that creates steady passive income, a systematic screening process is important. One useful method involves selecting for companies that provide a good dividend now and also have the fundamental financial soundness to maintain and possibly increase those payments. This method often uses combined ratings that judge several parts of a business. A practical first step is to find stocks with a high dividend rating, which measures yield, growth, and safety, while also needing acceptable scores for profit and financial condition. This tiered filter helps sidestep the classic "yield trap", a stock with a high payout that is in danger because of weak business foundations.
FTAI AVIATION LTD (NASDAQ:FTAI) appears as a candidate from this kind of screening method. The company, which concentrates on owning, leasing, and maintaining commercial jet engines, shows an interesting profile for dividend-oriented investors. According to its fundamental analysis report, it receives an overall rating of 6 out of 10, with especially good scores in growth (8) and dividend (8). This pairing indicates a business that is paying shareholders now while also enlarging its activities, a potentially strong pair for total return.
Dividend Appeal: High Yield with a Sustainable Core
The main draw for income investors is FTAI Aviation's large dividend yield. The report notes a yearly dividend yield of 8.12%, which is much higher than both its industry average (1.35%) and the wider S&P 500 (about 1.92%). A high yield by itself is not a reason to buy; it must be checked for safety. Here, FTAI displays positive indicators:
- Payout Ratio: The company uses 31.92% of its earnings for dividends. This is seen as a low and safe payout ratio, meaning most profits are kept for reinvestment or to protect against future problems, lowering the near-term chance of a dividend reduction.
- Growth and History: While the yearly dividend growth rate is a moderate 2.19%, the company has built a consistent history, having paid dividends for at least ten years. Significantly, the analysis states that "the dividend of FTAI is growing, but earnings are growing more, so the dividend growth is sustainable." This match of earnings and dividend growth is a key test for the lasting strength of the income.
Supporting Fundamentals: Profitability and Financial Health
A high dividend rating needs to be backed by acceptable business results, which is why screens include profit and condition measures. FTAI's profit rating of 6 shows a varied but getting better situation. The company has shown notable margin performance, with an operating margin of 31.12% and a profit margin of 19.30%, each beating most of its competitors in the Trading Companies & Distributors industry. Its return on equity is very high at 179.17%. These numbers show that the basic engine leasing and maintenance business can create significant profit from its assets, which is the final source of consistent dividend payments.
The financial condition rating of 5 highlights zones of soundness and attention, usual for businesses needing much capital. On the good side, liquidity is solid:
- A Current Ratio of 5.84 and a Quick Ratio of 3.27 are much better than industry competitors, showing good ability to meet near-term bills.
- An Altman-Z score of 5.81 shows no short-term bankruptcy danger.
The principal note for investors is the company's debt. A Debt/Equity ratio of 13.65 shows a large use of debt financing, which is normal in asset-heavy leasing but needs watchful observation, particularly when interest rates are higher. The screen's need for an "acceptable" condition rating helps identify such companies that, while carrying debt, still keep good liquidity and solvency scores.
Growth at a Valuation Premium
Maybe the most unique part of FTAI's profile is its good growth path next to its high yield. The company is not a static income choice; it is getting bigger quickly:
- Revenue increased by 24.99% over the last year.
- Earnings Per Share jumped by 63.43% in the last year.
- Analysts think this speed will continue, with EPS projected to increase by an average of 32.28% each year in the next few years.
This growth explains part of its market price, which is otherwise high on standard measures like its Price/Earnings ratio of 60.92. The analysis states that the low PEG ratio, which includes growth, "indicates a rather cheap valuation of the company." For dividend investors, this growth element is important as it supports future dividend raises and offers chance for price increase.
Conclusion
FTAI Aviation offers a multi-part chance for dividend investors. It meets a strict screen by providing a high, well-backed yield supported by good profit margins and adequate financial condition, especially in liquidity. Its notable feature is the uncommon pairing of a high present income with fast earnings growth, hinting at the possibility for both income and price gains. Investors must balance the high price and large debt against these positives. For those using a screen-based method, FTAI represents the kind of company that goes further than a basic high-yield hunt to find businesses made to maintain their shareholder payments.
Interested in examining other stocks that meet similar dividend-centered criteria? You can see the complete list of results from the "Best Dividend" screen here.
Disclaimer: This article is for information only and does not form financial guidance, a suggestion, or an offer or request to buy or sell any securities. The information shown is based on supplied data and should not be the only foundation for any investment choice. Investors should do their own research and talk with a qualified financial advisor before making any investment. Past results are not a guide for future outcomes.
