MAXIMUS INC (NYSE:MMS): A Dividend Stock with a Decade of Growth and Financial Resilience

For investors looking for dependable income, dividend investing is a key approach, especially when concentrating on companies that provide good yields and show financial steadiness and lasting payment abilities. The method used applies an organized filtering process to find stocks with solid dividend traits, enough profit to maintain those payments, and sufficient financial condition to handle economic shifts. This combination of dividend caliber, profit strength, and balance sheet toughness helps remove companies where high yields could be hiding potential problems.

MAXIMUS INC (NYSE:MMS) appears as a notable option through this view, working mainly in government health and human services program management. The company’s operational approach, centered on long-term government contracts, offers a degree of income predictability that is beneficial for steady dividend payments.

Dividend Sustainability and Track Record

A key part of dividend investing is the lasting nature of payments, which depends on both the company’s capacity to produce earnings and its dedication to giving capital back to shareholders. MAXIMUS shows ability in these areas:

• Dividend Yield: The present yield is 1.36%, which, while not high next to some yield-focused stocks, is backed by a strong payout ratio of only 22.11% of income. This low ratio shows significant room to keep or possibly raise dividends without pressuring finances.
• Growth and Consistency: The company has raised its dividend for a minimum of 10 straight years, with a yearly growth rate of 3.84% over the last five years. This history of steady and increasing payments highlights a capital return policy favorable to shareholders.
• Earnings Coverage: With earnings expected to grow at 12.93% per year, dividend growth seems lasting. The reality that earnings are rising quicker than the dividend adds to the security and possibility for future raises.

Profitability Foundations

A company’s profit is essential for supporting dividend payments over time. MAXIMUS displays decent profit measures that confirm its ability to maintain payments:

• Return Metrics: The company’s return on equity (17.84%) and return on invested capital (10.49%) both do better than large segments of industry competitors, showing effective use of capital.
• Margin Stability: While gross margins are somewhat low at 23.98%, the operating margin of 9.53% stays acceptable. Recent margin challenges have been observed, but the total profit rating is still sufficient, making sure that dividends are supported by real earnings ability.

Financial Health and Resilience

Financial condition guarantees that a company can handle downturns without endangering its dividend. MAXIMUS shows a firm balance sheet:

• Liquidity Position: With a current ratio and quick ratio both at 2.27, the company has good short-term liquidity, lowering immediate financial danger.
• Leverage: A debt-to-equity ratio of 0.91 shows reasonable borrowing, which is controllable considering the steadiness of its cash flows from government contracts. The company’s Altman-Z score of 3.31 also suggests a low chance of financial trouble.

Valuation Context

From a valuation standpoint, MAXIMUS trades at a P/E ratio of 14.49, which is less expensive than 78.82% of its industry competitors. This fair valuation, along with a forward P/E of 11.38, indicates that the stock is not overvalued, offering a buffer for investors focused on income.

Conclusion

MAXIMUS INC stands as a well-rounded choice for dividend investors, merging a decent yield with a established history of dividend growth, sufficient profitability, and good financial condition. Its operational model, focused on government services, provides income stability that matches well with the goals of portfolios seeking income.

For investors wanting to examine other dividend stock options picked using similar strict standards, more outcomes are available using this Best Dividend Stocks screen.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation and risk tolerance before making investment decisions.