For investors looking for a consistent flow of passive income, a systematic selection process is needed to distinguish dependable distributors from possible disappointments. One useful technique uses filters for stocks that provide a good dividend and are also supported by sound basic business operations. This method focuses on businesses with high dividend grades, which evaluate yield, increase, and durability, while also asking for satisfactory marks for earnings strength and monetary soundness. This detailed method aids in finding organizations able to continue and possibly raise their distributions in the future, instead of those whose high yields could signal a weakening company.
Rayonier Inc. (NYSE:RYN), a real estate investment trust (REIT) concentrated on timberland, appears as a selection from this kind of selection process. The company's basic picture indicates it deserves additional examination from investors focused on dividends.
A Good Dividend Picture
The main attraction for income investors is found in RYN's dividend traits, which are reflected in its firm ChartMill Dividend Rating of 7. This grade combines a number of important measures into one, practical score.
- Good Yield: The stock presently gives a yearly dividend yield of 4.56%. This supplies a notable income flow that is much higher than the typical yield of the S&P 500.
- Maintainable Distribution: Importantly, this yield seems maintainable. Rayonier distributes about 30.67% of its income as dividends, a cautious proportion that leaves plenty of space to put money back into the business and handle economic slumps without endangering the payment. The company also has a consistent history, having given dividends for a minimum of ten years.
- Increase and Record: While the yearly dividend increase rate is a moderate 4.39%, it is positive. Also, analysts project the company's profits to rise at a quicker rate than the dividend, which backs the possibility for future distribution raises. This equilibrium between a satisfactory current yield and a maintainable, rising payment is a central part of the selection method, intending to steer clear of businesses where the dividend itself could be in danger.
Base of Earnings Strength and Soundness
A high dividend is only as reliable as the company's capacity to pay for it. This is why the selection rules call for satisfactory scores in earnings strength and monetary soundness, areas where Rayonier also does satisfactorily. A firmly profitable company creates the earnings needed to back dividends, while a sound balance sheet supplies stability and room to maneuver.
Rayonier's ChartMill Profitability Rating of 8 shows firm basic earnings capacity. The company has notable return measures, including a Return on Invested Capital (ROIC) of 9.84%, which does better than most of its competitors in the specialized REITs field. Its profit margin is also very good. This high level of earnings strength is a main reason the dividend distribution proportion stays low and maintainable, directly connecting to the selection reasoning of searching for monetarily secure income.
Also key is the company's monetary fortitude, shown by a ChartMill Health Rating of 8. Rayonier keeps a sound balance sheet with a low debt-to-equity ratio of 0.37, showing a firm balance between debt and equity funding. Its liquidity is also firm, with current and quick ratios much above 3.0, suggesting it has more than enough means to meet near-term responsibilities. For a dividend investor, this monetary soundness lowers the chance of a dividend reduction during times of market pressure, matching exactly with the method's aim of finding durable income producers.
Valuation and Increase Points
While the screen concentrates on dividend, earnings strength, and soundness, a complete view requires observing other elements. Rayonier's valuation, based on standard earnings multiples, seems high compared to wider market averages. However, this is fairly common for its field and could be partly explained by its firm earnings strength and asset-heavy business model. Regarding increase, the company has shown firm revenue growth over recent years, though analyst projections for the immediate future are more limited.
A Full Basic Examination of Rayonier Inc. (NYSE:RYN) is ready for those who want to review all basic information and grades.
Is It a Match for Your Portfolio?
For investors using a method that emphasizes maintainable income from basically sound companies, Rayonier Inc. offers a strong example. It satisfies the central selection requirements with a good and well-backed dividend, supported by firm earnings strength and a very sound balance sheet. The stock illustrates the kind of selection this technique tries to find: one where the dividend is not a single attraction, but a result of a sound and profitable business.
Curious about reviewing other stocks that satisfy similar filters for high dividend grades, earnings strength, and monetary soundness? You can execute the "Best Dividend Stocks" screen personally to view the complete list of present selections.
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 potential loss of principal. Investors should conduct their own research and consider their individual financial circumstances before making any investment decisions.
