MAXIMUS INC (NYSE:MMS): A Reliable Dividend Stock with a Sustainable Payout

When looking for reliable dividend-paying stocks, many investors use systematic screening methods that focus on both income generation and fundamental stability. One good method involves selecting for companies with good dividend characteristics while also having sufficient profitability and financial condition. This method helps find businesses able to maintain their payments through different market environments, balancing yield possibility with operational strength. The ChartMill Dividend Rating serves as a complete tool for this purpose, assessing several factors including dividend history, growth pattern, and payment sustainability.

MAXIMUS INC (NYSE:MMS) appears as an interesting candidate through this screening method. The company, which runs government health and human services programs and gives technology solutions to government agencies, shows features that dividend investors frequently look for. Its business model serving government clients gives revenue stability, while its varied operations across U.S. Services, U.S. Federal Services, and international segments provide geographic spread.

Dividend Characteristics

MAXIMUS shows several good dividend qualities that add to its 7/10 Dividend Rating:

• Reliable History: The company has continued dividend payments for more than ten years without cuts, showing dedication to shareholder returns through different market environments
• Sustainable Payout Ratio: With only 22.11% of earnings used for dividend payments, MAXIMUS keeps a careful method that leaves plenty of room for business investment and dividend safety during economic declines
• Modest Growth: The dividend has increased at a yearly rate of 3.84%, showing a pattern of steady rises instead of irregular changes
• Competitive Position: While the 1.49% yield seems moderate, it is better than 85% of industry peers in the IT Services sector, although it is a bit lower than the wider S&P500 average

Profitability Base

The company's profitability numbers support its capacity to continue dividend payments, receiving a good 6/10 Profitability Rating:

• Strong Returns: Return on Equity of 17.84% is better than 82% of industry rivals, while Return on Assets of 7.09% and Return on Invested Capital of 10.49% also rank well within the sector
• Margin Points: Operating margin of 9.53% is higher than 68% of peers, but gross margin of 23.98% is in the lower industry group, showing the type of its government services business
• Earnings Path: Recent EPS growth of 26.83% shows good momentum, while five-year average EPS growth of 6.09% shows steady, though average, increase

Financial Health Evaluation

MAXIMUS maintains sufficient financial stability with a 6/10 Health Rating, giving confidence in its continuing operations:

• Liquidity Strength: Current and quick ratios are both at 2.27, showing good short-term financial flexibility and being higher than two-thirds of industry rivals
• Solvency Position: The Altman-Z score of 3.19 points to low bankruptcy risk, while the debt-to-equity ratio of 0.91 shows average but acceptable leverage
• Shareholder-Oriented Actions: The company has lowered shares outstanding over both one-year and five-year periods, showing capital return priorities besides dividends

Valuation Background

The company's valuation numbers indicate fair pricing compared to its fundamentals:

• Good Multiples: A P/E ratio of 12.95 is much lower than industry averages, while the forward P/E of 10.17 shows expected earnings growth
• Growth Consideration: The PEG ratio accounting for expected 15.44% EPS growth indicates the current valuation sufficiently accounts for growth expectations

The mix of these factors makes MAXIMUS especially noteworthy for dividend-focused investors who value sustainability over highest yield. The company's government-contract business model provides revenue predictability, while its careful payout ratio and good liquidity position build a cushion against economic instability. The detailed fundamental analysis report gives more information on these comparative numbers.

For investors looking for similar options, the Best Dividend Stocks screen provides other companies meeting these standards of good dividend characteristics combined with sufficient profitability and financial condition.

Disclaimer: This analysis is based on fundamental data and ratings given by ChartMill and shows an objective review of the company's financial numbers. It is not meant as investment advice, and investors should do their own research and think about their personal financial situations before making investment choices. Past performance and current numbers do not ensure future outcomes.