MAXIMUS INC (NYSE:MMS): A Dividend Stock with a Decade of Dependable Payments

Investors looking for dependable income often use dividend investing, a method centered on finding companies that not only provide regular dividends but also have the financial capacity to keep and possibly increase those payments. A structured method for this strategy uses filters to find stocks with a good dividend record while also having acceptable profitability and financial condition, making sure the dividend is both appealing and durable. This process helps remove companies where high payments could be hiding financial trouble or where dividends are threatened by weak earnings. MAXIMUS INC (NYSE:MMS) appears as a result from this kind of filtering, deserving more examination for those creating a portfolio focused on dividends.

Dividend Profile

The foundation of any dividend investment is the yield, its pattern of growth, and its durability. MAXIMUS makes a good argument in these areas, which is shown by its firm ChartMill Dividend Rating of 7.

• Dividend Yield and Comparison: The company provides a yearly dividend yield of 1.43%. This is not the top yield available, but it is good relative to its group. It is higher than the average yield of similar companies and is considered a more attractive dividend than most firms in the IT Services sector.
• Track Record and Growth: A key element for dependability is a company's dividend history. MAXIMUS has built a dependable history, having paid and, significantly, not cut its dividend for at least ten years. This steady behavior gives trust in its dedication to shareholders. The dividend has increased at a yearly rate of 3.84%, showing a small but consistent rise in investor income over time.
• Payout Sustainability: Possibly the most important part for a dividend investor is the safety of the payment. MAXIMUS shows a low and manageable payout ratio, using only 22.11% of its earnings for dividends. This keeps a large amount of profits to be put back into the business for future development or to serve as a cushion in weaker economic periods. Also, the company's earnings are increasing more quickly than its dividend, which supports the durability case, as the dividend becomes less of a load for the company.

Profitability and Financial Health

A good dividend is supported by a base of steady profitability and a sound balance sheet. These elements are key to the filtering method because a company cannot consistently give profits to shareholders if it is not producing them or if its financial state is weak. MAXIMUS gets a 6 in both ChartMill's Profitability and Health ratings, showing an acceptable and steady operational and financial foundation.

• Profitability Strengths: The company shows effective use of its assets and equity, with a Return on Equity of 17.84% that puts it in the best group of its industry. Its Profit Margin and Operating Margin are also stronger than a large part of its competitors. Although some margin decrease has been seen in recent years, the general profitability image supports the company's capacity to pay for its dividend.
• Financial Health Indicators: From a cash availability view, MAXIMUS is in a good state. Its Current and Quick Ratios are both at a sound 2.27, showing no immediate problem in meeting its responsibilities and doing better than many industry rivals. The company has also been decreasing its count of shares available and reducing its debt/assets ratio, which are actions that benefit shareholders. While its Debt/Equity ratio is average, it does show some use of debt financing that is typical in the industry.

Valuation and Growth Context

For a dividend investment to be truly successful, the stock itself should be priced fairly and have a growth path that allows for future dividend raises. MAXIMUS seems to be valued appropriately, with a Price/Earnings ratio of 14.50 that is much more appealing than the wider S&P 500 average and less expensive than most of its industry counterparts. Its projected P/E ratio is even more attractive. The company's earnings are predicted to increase at a solid 15.44% in the next few years, which not only supports its valuation but also creates a path for possible future dividend growth, fitting well with a long-term dividend growth plan.

A more detailed breakdown of these fundamental factors can be found in the full ChartMill Fundamental Analysis Report for MMS.

MAXIMUS INC stands as a candidate for review by dividend investors who value a mix of yield, durability, and financial steadiness. Its acceptable dividend yield, ten-year history of consistent payments, and low payout ratio are the main parts of its attraction. These are supported by acceptable profitability measures and a sound cash position, which are necessary for the lasting strength of any income investment. While the dividend growth speed is small, it is backed by predicted earnings growth and a fair valuation.

For investors wanting to do their own research and find other companies that match a similar description of good dividends with acceptable health and profitability, the Best Dividend Stocks screen is a good place to begin more study.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an endorsement of any investment strategy. All investments involve risk, including the possible loss of principal. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.