JACK HENRY & ASSOCIATES INC (NASDAQ:JKHY) was identified as a high-quality dividend stock through our Best Dividend screen. The company combines a solid dividend profile with strong profitability and financial health, making it an appealing choice for income-focused investors. Below, we examine why JKHY stands out.
Dividend Strength
- Consistent Dividend Growth: JKHY has increased its dividend for at least 10 consecutive years, with an annual growth rate of 6.79%. This track record demonstrates reliability.
- Sustainable Payout Ratio: The company spends just 37.87% of its earnings on dividends, indicating room for future increases without straining finances.
- Reasonable Yield: While the current yield of 1.29% is below the S&P 500 average, it is slightly higher than the industry average of 4.86%, balancing income and growth potential.
Profitability and Financial Health
- High Profitability Rating (8/10): JKHY delivers strong returns, with a Return on Invested Capital (ROIC) of 16.61%, outperforming 92% of its peers.
- Solid Financial Health (8/10): The company maintains a low debt-to-equity ratio of 0.04 and a healthy Altman-Z score of 11.77, reducing bankruptcy risk.
- Stable Margins: Operating and profit margins (23.22% and 18.50%, respectively) are above industry averages, reflecting efficient operations.
Valuation and Growth Considerations
- Premium Valuation: JKHY trades at a P/E of 30.43, above the industry average, but this may be justified by its strong fundamentals.
- Steady Growth: Earnings per share (EPS) grew by 13.32% last year, with analysts forecasting continued growth at 12.69% annually.
For a deeper analysis, review the full fundamental report on JKHY.
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Disclaimer
This is not investment advice. Always conduct your own research before making financial decisions.
