For investors looking for dependable income, a methodical selection process can find companies that provide more than a high stated yield. A typical process involves selecting for stocks that join a firm dedication to shareholder payments with good basic business soundness and earnings. This process emphasizes longevity, trying to find companies with the financial strength to keep and possibly increase their dividends over time, instead of those where a high yield may point to basic trouble. One stock that appears from such a methodical process is Robert Half Inc (NYSE:RHI), a worldwide supplier of specialized staffing services and business consulting.
A Notable Dividend Profile
The central attraction of RHI for income-oriented investors is found in its notable dividend traits, which are a main result of the selection standards. A high dividend score is not given easily, it shows a mix of good yield, a steady record, and lasting growth potential.
- Good Yield: RHI presently gives a yearly dividend yield of 8.13%. This is much higher than the industry average of about 1.41% and also exceeds the wider S&P 500 average. For an investor, this means a large direct income flow compared to the share price.
- Steady and Increasing Payment: The company has built a steady history, having paid and not reduced its dividend for at least ten straight years. Also, it has increased its dividend at a notable average yearly rate of 11.32% over this time, showing a steady dedication to giving more capital to shareholders.
- Growth Longevity: While the present payout ratio seems high, study indicates the dividend growth is lasting. The basic report notes that although the company is paying out a high part of its present income, its earnings are expected to increase at a quicker pace than the dividend. This future-focused measure is important, as it suggests the company can finance its increasing payment from growing profits rather than by straining its financial means.
Supporting Basics: Soundness and Earnings
A high dividend yield by itself can be a problem if the company's base is weak. This is why the selection process requires acceptable scores in financial soundness and earnings. These parts are important because they judge the company's capability to produce the cash required to finance dividends and manage economic periods without endangering its financial position.
RHI gets an 8 out of 10 for Financial Soundness, pointing to a very sound balance sheet. A notable aspect is the company's total absence of debt, putting it with the top in its field for financial adaptability. With a high Altman-Z score showing no bankruptcy danger and a record of lowering its share count, the company is in a position of strength. This clean balance sheet gives a major cushion, making sure dividend payments are not endangered by interest costs or refinancing dangers.
The company's Earnings score is a good 6. While recent profit margins have seen pressure in a difficult setting for staffing companies, the basic earnings measures tell a more detailed story. RHI's return on assets and return on equity are good within its industry. Significantly, its average return on invested capital over the last three years is almost two times the industry average, indicating a strong past ability to generate earnings from its capital. This past earnings record, joined with a clean report of financial soundness, backs the idea that the company has the basic ability to maintain its operations and its dividend.
Value and Growth Setting
From a value viewpoint, RHI shows a varied image. Its Price/Earnings ratio is somewhat high on a plain basis but is actually lower than most of its industry group and the wider market. More future-focused measures, like the Price/Forward Earnings and Enterprise Value to EBITDA ratios, indicate the stock is valued fairly or even low relative to its industry.
The growth story is presently in change. The company has seen drops in sales and earnings per share over the last year, showing wider economic challenges affecting demand for staffing services. However, analyst forecasts point to a major turn, with high expected growth in both earnings and sales over the next years. This expected pickup is a key part for dividend longevity, as it matches the report's finding that future earnings growth should support the dividend path.
A Subject for More Study
Robert Half Inc appears as a notable example for the dividend selection process. It meets the central standards by giving a high, well-backed yield supported by ten years of growth, all while keeping a debt-free balance sheet and a historically earning operation. The high payout ratio is an item for watchful observation, but it is explained by strong expected earnings growth and exceptional financial soundness.
For investors using this method, RHI justifies a more detailed examination. Its mix of high income, financial strength, and a possible growth turn makes it a distinct subject in the dividend investing field. As usual, this study should be the beginning point for more complete investigation, thinking about industry periods and the company's competitive place.
Interested in examining other stocks that meet similar strict dividend, soundness, and earnings filters? You can perform the process yourself and see the complete list of outcomes here.
Disclaimer: This article is for information and learning only and does not form investment guidance, financial guidance, or a suggestion to buy or sell any security. The study is based on data and scores given by ChartMill, which assesses past performance and analyst estimates. Past performance is not a guide to future outcomes. Investors should do their own study and think about their personal financial situation and risk tolerance before making any investment choices. You can see the detailed basic analysis for RHI here.
