Robert Half Inc. (NYSE:RHI): A High-Yield Dividend Stock With a Debt-Free Balance Sheet

For investors aiming to create a portfolio centered on producing passive income, a disciplined screening process is necessary. A typical approach includes looking past only a high present yield to identify companies with maintainable payouts. This frequently means selecting for stocks that have not just a good dividend profile but also show sound basic business condition and earnings power. A stock that meets this kind of multi-layered screen indicates its dividend is supported by a durable business, possibly providing a steadier income flow over many years. One company that recently appeared from this type of method is Robert Half Inc (NYSE:RHI), a worldwide supplier of talent solutions and business consulting.

A Notable Dividend Profile

The main attraction of RHI for income-oriented investors is its strong dividend traits, which are reflected in its high ChartMill Dividend Rating of 8 out of 10. An examination of the fundamental analysis report shows the principal positives:

• Appealing Yield: The stock now provides a yearly dividend yield of 8.80%, which is much greater than both the S&P 500 average (about 2.31%) and the professional services industry average (4.12%). It is in the highest group of its sector for yield.
• Steady and Increasing Payout: The company has built a reliable history, having paid and raised its dividend for at least 10 straight years. Also, the dividend has risen at a notable yearly rate of 11.32% over the last five years, showing a dedication to giving more capital back to shareholders as time passes.
• Future Sustainability Question: A key point for investors is the present payout ratio, which is at 150.26% of net income. This is a warning sign, showing the company is distributing more in dividends than it made in the last twelve months. Still, the analysis adds that earnings are expected to rise quicker than the dividend in the next few years, which might return this ratio to a more maintainable point if those predictions happen.

This mix of high yield, steady increase, and a long record is precisely what dividend investors look for, as it indicates a company that values shareholder returns.

Basis of Earnings Power and Financial Condition

A high dividend yield can occasionally be a pitfall, indicating a troubled company whose stock price has fallen sharply. So, the screening rules needing "acceptable earnings power and condition" are key protections. RHI’s scores in these areas give assurance that the dividend is not a final effort.

Earnings Power (Rating: 6/10): While not outstanding, RHI’s earnings power rating is acceptable. The company has been profitable with positive operating cash flow each year for the past five years. Important return measures like Return on Assets and the three-year average Return on Invested Capital are higher than industry averages. It is necessary to recognize recent strain, as both profit and operating margins have fallen in the last couple of years, showing a harder setting for the staffing industry. This background is important for understanding the high payout ratio noted before.

Financial Condition (Rating: 8/10): This is where RHI stands out and offers a major safety buffer for dividend investors. The company is in very good financial state, with a notable trait being no outstanding debt. This removes interest cost and default danger, providing the company great adaptability. Also, it has been steadily lowering its share count over recent years, which is an action favorable to shareholders that can increase earnings per share with time. Liquidity ratios are standard and sound, showing no immediate ability-to-pay worries.

Price and Increase Background

From a price standpoint, RHI seems fairly valued compared to its market and industry. Its Price-to-Earnings and Price-to-Forward-Earnings ratios are lower than the wider S&P 500 and most of its industry competitors. Its Price-to-Free-Cash-Flow ratio is especially appealing. This implies the market has already accounted for recent earnings difficulties.

The increase story is blended but indicates a hopeful turn. The last year has experienced major drops in both sales and earnings per share. However, analyst projections indicate a good recovery, with anticipated yearly EPS increase of over 28% and sales increase of 8.5% in the next few years. For a dividend investor, this expected pickup is essential, as it backs the idea that the present high yield and payout ratio might move toward a more maintainable balance as profits recover.

A Subject for More Study

Robert Half Inc. offers an interesting example from a disciplined dividend screen. It provides a high, increasing yield supported by a very strong, debt-free balance sheet—an uncommon and wanted mix. The main area for examination is the unmaintainably high payout ratio, which makes the stock’s attraction largely rely on the expected earnings rebound. If the company manages the present industry downturn and meets growth projections, the dividend could be adequately backed. If not, the payout might be in danger.

This examination shows why screening for condition and earnings power together with dividend measures is so valuable: it helps distinguish possibly durable income payers from price pitfalls.

Interested in examining other stocks that meet similar strict dividend rules? You can execute the "Best Dividend Stocks" screen yourself to view the complete list of possibilities by using this link: Best Dividend Stocks Screen.

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Disclaimer: This article is for information only and is not financial guidance, a suggestion, or an offer to purchase or sell any security. The examination uses data and scores from ChartMill, which assesses past results and analyst projections. Investing carries risk, including the possible loss of original investment. You should do your own complete study and think about talking with a qualified financial advisor before making any investment choices.