For dividend investors, the main aim is frequently to create a portfolio that delivers a steady and increasing flow of passive income. This demands looking past a high present yield to locate companies with the financial capacity to maintain and raise their payments over time. A methodical screening process can aid in finding these possibilities by selecting for stocks that join a good dividend history with sound core business operations.
One useful technique is to apply a multi-factor filter that looks for companies with a high ChartMill Dividend Rating, which assesses yield, increase, record, and durability. To confirm these dividends rest on a firm base, the filter also calls for a minimum ChartMill Profitability Rating and ChartMill Health Rating. This process intends to remove companies where a high yield could signal trouble, concentrating instead on those with the profit capacity and balance sheet soundness to maintain their shareholder payments for the future.
OSHKOSh CORP (NYSE:OSK), a designer and maker of purpose-built vehicles and equipment, appears as a candidate from this filter. The company’s basic profile indicates it may deserve more attention from income-oriented investors.
A Good Dividend History
OSK’s attraction for dividend investors is supported by its ChartMill Dividend Rating of 7 out of 10. This rating combines several important elements that are key for a lasting income investment.
- Dependable Record and Increase: The company has built a consistent history, having paid and, notably, not reduced its dividend for at least ten years. Also, it has raised its dividend at a notable average yearly rate of 11.17% over this time, showing a dedication to giving more capital back to shareholders as the company expands.
- Lasting Payment: A crucial measure for dividend durability is the payout ratio. OSK pays about 20.15% of its income as dividends. This is a low ratio, meaning the company keeps most of its profits to put back into the business, support expansion, or manage economic slumps without risking the dividend.
- Noteworthy Yield: With a present dividend yield of 1.43%, OSK provides a yield that is fair within its own setting. It is key to see that this yield is higher than the average for its industry (1.01%) and is backed by the sound basics noted above, not made high by a falling stock price.
Backed by Adequate Profitability and Financial Soundness
The filter rules ask for more than a good dividend narrative; they need proof of a workable core business. OSK’s scores in profitability and soundness give this supporting proof, which is necessary for the future feasibility of the dividend plan.
- Profitability Base (Rating: 6): A company must be profitable to pay dividends. OSK has been regularly profitable with positive cash flow over the last five years. Its return measures, like a Return on Equity of 14.28%, do better than a large part of its industry group. While its gross margin is a relative soft spot, its operating and profit margins have shown good directions, adding to the profits that pay for the dividend.
- Financial Soundness (Rating: 5): Solvency and liquidity are key to make sure a company can meet its duties, including dividend payments, in hard times. OSK shows a firm balance sheet with a good debt-to-equity ratio of 0.24. A particularly strong indicator is its very low debt-to-free-cash-flow ratio of 1.93, meaning it could clear all its debt in less than two years with its present cash flow production—a mark of high financial capacity.
Price and Expansion Setting
From a price standpoint, OSK seems fairly valued. Its Price-to-Earnings ratio of 14.77 is viewed as acceptable in simple terms and is less expensive than almost 90% of its industry group. Analysts project profits to expand at a mid-teens percentage rate in the next few years, which could back continued dividend growth. While recent sales and profits have had some declines, the long-term expansion directions and future projections stay positive.
A complete outline of OSHKOSh CORP's basic analysis is ready in its full ChartMill Fundamental Report.
Conclusion
For investors using a plan that emphasizes lasting, increasing income, OSK offers a case built on several supports: a dependable and growing dividend with a lasting payout ratio, supported by adequate company profitability and a financially sound balance sheet. This mix matches the central goal of dividend investing—looking for income that is not only high now, but probable to be safe and greater later.
Curious about finding other stocks that fit similar rules for good dividends, profitability, and financial soundness? You can use the "Best Dividend Stocks" filter yourself to view the whole list of present candidates here.
Disclaimer: This article is for information only and is not financial advice, a suggestion, or a deal to buy or sell any security. The study is based on data and scores from ChartMill, which looks at past results and analyst forecasts. Investors should do their own complete research and think about their personal money situation and risk comfort before making any investment choices.
