Shoe Carnival Inc. (NASDAQ:SCVL) Offers a Sustainable High-Yield Dividend

For investors looking for a dependable source of passive income, a methodical screening process is needed to distinguish solid dividend payers from possible value traps. One useful tactic focuses on companies that provide a good dividend and also have the fundamental financial soundness to maintain and possibly raise those payments. This technique favors stocks with high marks in ChartMill's Dividend Rating, which examines yield, growth, and sustainability, while also demanding acceptable marks in Profitability and Financial Health. This layered method aids in finding companies where the dividend is backed by firm earnings and a good balance sheet, instead of being a temporary result of a low stock price.

Shoe Carnival Inc. (NASDAQ:SCVL) appears as a candidate for more detailed review under this view. The footwear retailer receives a noteworthy overall Dividend Rating of 8 out of 10, indicating a good fit with the main goals of dividend-oriented investing.

Dividend Strength and Sustainability

The attraction of SCVL for income-focused investors comes from several important dividend measures that the screening process aims to emphasize. A high Dividend Rating is key since it evaluates more than just the yield number to judge the payout's quality and dependability.

• Good and Above-Average Yield: SCVL presently has a yearly dividend yield of 3.29%. This is clearly higher than both the industry average of 2.01% and the S&P 500's average of about 2.00%, delivering a useful amount of current income.
• Notable History of Growth: Possibly more significant than the present yield is the company's proven dedication to raising shareholder returns. SCVL has increased its dividend at an average yearly pace of 22.78% over the last five years and has a dependable record of at least ten years without a dividend cut. This steady growth is a sign of management that favors shareholders and a main goal for dividend growth approaches.
• Maintainable Payout Ratio: The durability of a dividend is critical, and here SCVL also performs favorably. The company distributes only 28.17% of its income as dividends. This cautious payout ratio offers a large safety margin, confirming the dividend is easily paid from earnings and allows plenty of space for putting money back into the business or for continuing payments during weaker economic times.

Supporting Fundamentals: Profitability and Health

A high dividend rating by itself can be incomplete if the company's base is weak. This is why the screening method requires acceptable marks in Profitability and Financial Health, these ratings verify the company has the operational and financial ability to back its shareholder payments. SCVL's Profitability Rating of 7 and Health Rating of 8 supply that necessary verification.

• Profitable Operations: SCVL keeps good margins, with a Profit Margin of 5.06% and an Operating Margin of 6.12%, both placed in the top group of its specialty retail sector. The company has also displayed positive patterns, with these margins increasing well in recent years. This reliable profitability is what finances the dividend.
• Sound Financial Health: A good balance sheet is a dividend investor's key protection against reductions in difficult periods. SCVL performs well here with an Altman-Z score showing no bankruptcy concern and, most importantly, has no long-term debt. A balance sheet without debt greatly lowers financial risk and gives unusual adaptability, meaning the company does not need to redirect cash from shareholders to cover interest costs. Its high current ratio also points to good short-term liquidity.

Valuation and Growth Considerations

While the screen concentrates on dividend, profitability, and health, a complete view needs examining other fundamental areas. SCVL shows a varied profile here, which is important for context.

• Interesting Valuation: The stock seems low-priced on several measures. Its P/E ratio of 8.25 and Forward P/E of 10.92 are much lower than industry and wider market averages, hinting the market may be including negative expectations.
• Difficult Growth Prospects: This valuation difference is probably connected to growth worries. Both revenue and earnings per share fell over the past year, and analysts predict more decrease in the short term. The company's Growth Rating of 1 mirrors these notable obstacles. For a dividend investor, this highlights the value of the company's good health and profitability, these foundations will be vital in managing a possibly more difficult sales climate while safeguarding the dividend.

A Candidate for Further Research

Shoe Carnival Inc. offers an interesting example of a stock that meets a strict dividend-oriented screen. It joins a good, increasing, and well-supported yield with the basic strengths of firm profitability and a clean, debt-free balance sheet. These are exactly the traits that dividend investment methods try to find, income generation backed by a durable business model.

While short-term growth difficulties are clear and deserve notice, the company's financial strength offers a cushion. For investors whose main aim is maintainable income, SCVL's fundamentals in the key screened groups make it a stock deserving of more examination.

You can review the full fundamental analysis that supports this evaluation here: SCVL Fundamental Analysis Report.

This review of SCVL came from a methodical screen for quality dividend payers. If you want to see other companies that match similar standards for good dividends, profitability, and financial health, you can view the full screen here: Best Dividend Stocks Screen.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented is based on data provided and should not be the sole basis for an investment decision. Investors should conduct their own independent research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.