For investors looking for dependable income, dividend investing is a key method for creating lasting wealth. One organized method uses filters to find companies that provide good dividends and also show lasting business foundations. This process favors stocks with high ChartMill Dividend Ratings while keeping basic levels for earnings and financial condition, making sure picks can continue payments during different economic periods. This measured filtering helps steer clear of yield traps, companies with very high dividends that frequently come from weakening business operations.
Dividend Performance and Sustainability
Skyworks Solutions Inc (NASDAQ:SWKS) offers a strong example for dividend-oriented investors, reaching a ChartMill Dividend Rating of 7/10. The company's ability to generate income is notable in several important parts:
- Good Yield: SWKS provides a solid yearly dividend yield of 4.02%, much higher than the industry average of 2.16% and the S&P500's present yield of about 2.36%
- Steady History: The company has continued dividend payments for more than ten years with no cuts in the last five years, showing dedication to shareholder returns
- Notable Increase: Dividend increase averages 11.77% each year, showing management's belief in future cash flows
Still, investors should be aware the present payout ratio is at 110.80% of earnings, which brings up questions about lastingness. This high ratio indicates the company is giving more to shareholders than it makes, although this should be considered next to SWKS's good cash flow creation and balance sheet condition.
Profitability and Operational Condition
With a ChartMill Profitability Rating of 5/10, Skyworks shows sufficient earning ability to back its dividend goals. The company keeps good operational numbers in spite of recent margin pressure:
- Return Numbers: SWKS gives good returns with ROA of 5.14% (better than 70.54% of industry companies) and ROIC of 7.33% (higher than 72.32% of rivals)
- Margin Results: Profit margin of 9.88% and operating margin of 15.05% are above most semiconductor industry members
- Past Steadiness: Positive earnings and operating cash flow in four of the last five years show business toughness
While margin patterns have shown recent drops, the company's general profitability picture backs its ability to continue dividend payments, especially when joined with its sound balance sheet.
Financial Health and Steadiness
Skyworks gets a ChartMill Health Rating of 6/10, showing a solid financial base important for dividend lastingness. The company's balance sheet condition appears in several important parts:
- Debt Handling: Very little existing debt with a careful Debt/Equity ratio of 0.09 shows sensible financial management
- Liquidity Situation: Current ratio of 2.39 and quick ratio of 1.80 give good short-term financial room
- Bankruptcy Worry: Altman-Z score of 5.06 points to very little bankruptcy worry, giving trust in long-term survival
This financial condition is especially important for dividend investors, as it gives a cushion during economic slowdowns and makes sure the company can continue payments without hurting operational needs.
Valuation Points
Trading at fair valuation measures, SWKS gives an interesting possibility for value-minded dividend investors:
- Earnings Measure: P/E ratio of 11.73 looks good next to industry averages and the wider market
- Comparative Value: The company seems less expensive than 96.43% of semiconductor industry companies using standard P/E numbers
- Future View: Price/Forward Earnings ratio of 15.67 indicates the market has included future growth expectations
This valuation picture gives a safety buffer for income investors, possibly providing both dividend income and share price gain possibility.
Growth View and Future Possibilities
While past growth has been moderate, future estimates point to better movement:
- Earnings Speed-up: Analysts forecast EPS growth of 8.27% each year, showing possibility for dividend coverage betterment
- Revenue Growth: Expected revenue growth of 5.07% each year backs top-line increase
- Growth Path: The change from recent EPS drops to forecasted growth shows a positive turning point
This growth picture is important for dividend lastingness, as growing earnings give the base for future dividend raises and better payout ratios.
For investors wanting to look at similar options, the Best Dividend Stocks screen gives regularly refreshed picks using the same careful method that found SWKS. The full fundamental analysis report for Skyworks Solutions gives more detail for complete investigation.
Disclaimer: This analysis uses publicly available data and is given for learning purposes only. It does not form investment guidance, and investors should do their own study and talk with financial experts before making investment choices. Past results do not assure future outcomes, and all investments have risk including possible loss of original money.
