TEGNA Inc (NYSE:TGNA): A Strong Dividend Stock with Solid Profitability and Financial Health

Dividend investors frequently look for stocks that provide steady payouts, consistent growth, and sound financial standing. A method to spot these opportunities involves using a structured filtering process that identifies companies with high dividend scores, good profitability, and reasonable financial stability. TEGNA INC (NYSE:TGNA) appears as a potential choice from this filter, which focuses on stocks with a ChartMill Dividend Rating of 7 or above, a Profitability Rating of at least 5, and a Health Rating no less than 5. These standards help confirm that the chosen companies not only deliver appealing dividends but also possess the earnings capability and financial strength to maintain them.

Dividend Strength: Examining TGNA

TEGNA’s attractiveness to dividend investors comes from several important factors detailed in its fundamental analysis report:

• Dividend Yield & Growth
  TGNA currently provides a dividend yield of 3.27%, which is higher than the S&P 500 average of 2.40% and competitive in its sector. Additionally, the company has shown a five-year annualized dividend growth rate of 11.34%, indicating a dedication to raising shareholder payouts over time. While the yield may not be the highest available, the mix of yield and growth makes TGNA an appealing option for investors looking for both income and gradual increases in their cash flow.

• Payout Ratio & Sustainability
  A key measure for dividend sustainability is the payout ratio, which for TGNA is a modest 17.48% of earnings. This low ratio implies significant room for the company to keep, and possibly raise, its dividend even if earnings vary. However, it’s important to note that TGNA’s earnings growth is projected to slow in the short term, which might affect future dividend increases if profitability does not recover.

• Track Record
  TGNA has distributed dividends without interruption for at least 10 years and has not cut its payout in the last five years. This consistency is a positive sign for income-focused investors, as it shows management’s focus on rewarding shareholders.

Profitability and Financial Health: Supporting the Dividend

While dividend metrics are central to the filtering criteria, TGNA’s Profitability Rating of 8 and Health Rating of 5 offer further assurance of its ability to maintain payouts:

• Strong Profit Margins
  TGNA’s operating margin of 24.66% places it in the top 97% of its industry peers, while its profit margin of 15.21% exceeds 92% of competitors. These numbers highlight efficient operations and pricing strength, which are crucial for generating the cash flow required to support dividends.

• Balanced Financial Health
  The company’s debt-to-equity ratio of 0.83 aligns with industry standards, and its current ratio of 1.40 shows adequate liquidity to cover short-term liabilities. While the Altman-Z score of 2.81 puts TGNA in a "grey zone" for bankruptcy risk, it still performs better than 79% of its peers, indicating manageable debt levels.

Valuation: An Additional Advantage

TGNA trades at a P/E ratio of 5.17, well below both the industry average (31.69) and the S&P 500 (26.51). This undervaluation could offer a safety net for dividend investors, as the stock’s low multiple may reduce downside risk while providing income potential.

Final Thoughts

TGNA’s blend of a rising dividend, solid profitability, and reasonable valuation fits well with the filtering strategy’s objectives. While its earnings growth outlook is subdued, the low payout ratio and history of dividend growth offer protection against near-term hurdles.

For investors interested in discovering similar dividend opportunities, the Best Dividend Stocks screen presents a wider range of high-quality dividend-paying stocks.

Disclaimer: This article is not investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.