For investors looking for steady income, a methodical selection process is important. One useful approach uses filters to find companies that provide a good dividend and also have the fundamental financial soundness to keep and possibly increase those payments in the future. This requires examining more than just the stated yield to evaluate earnings, which provide the money for the dividend, and balance sheet soundness, which guarantees the company can handle economic difficulties without reducing its payout. A stock that performs favorably in these three areas—dividend reliability, earnings, and soundness—can be a key part of a durable income portfolio.
TEGNA INC (NYSE:TGNA), a media company concentrated on local news and broadcasting, appears as a candidate from this kind of selection method. Its fundamental picture indicates it may deserve further examination by investors focused on dividends.
Dividend Reliability and Growth
The main attraction for an income investor is found in TEGNA's dividend traits, which are assessed in its fundamental analysis report. The report points out a number of favorable points:
- Maintainable Yield: The company provides a forward dividend yield near 2.63%. This yield is more than twice the average for its field (1.26%) and exceeds the present S&P 500 average. Significantly, it is backed by a very low payout ratio.
- Good Payout Safety: TEGNA uses only about 23% of its earnings on dividend payments. This cautious payout ratio is a key sign of safety, creating a wide cushion that lets the company continue the dividend even if earnings experience a short-term decline.
- History of Growth: The company has built a steady history, having paid dividends for at least ten years without a decrease in the last five years. Also, it has increased its dividend at an average yearly rate above 11% during this time, showing a dedication to giving greater value to shareholders.
This mix—a fair yield, a large safety margin in the payout ratio, and a record of steady growth—meets the main aim of dividend investing: obtaining a predictable and increasing flow of passive income.
Foundational Earnings Back Payments
A lasting dividend needs to be paid for by a company that earns money. TEGNA's business shows good earnings, which directly backs its capacity to create the cash required for shareholder returns. Important measures from the fundamental report are:
- Good Margins: The company has an operating margin close to 21%, placing it with the better performers in the media field. Its profit margin is almost 12%, also above field averages.
- Effective Use of Capital: Returns on important investments are good, with a Return on Invested Capital (ROIC) of 7.32% and a Return on Equity (ROE) of 11.01%, both doing better than many field competitors.
- Steady Earnings: The company has earned money with positive cash flow in every one of the past five years, giving a stable base for its financial plans.
This good earnings rating is important for the selection strategy. It makes sure the dividend is not being paid from borrowed money or shrinking savings but is a true distribution of company profits, lowering the chance of a future reduction.
A Base of Financial Soundness
For dividend investors with a long-term view, a company's balance sheet fortitude is essential. Financial soundness guarantees the company can handle its debts and responsibilities without putting shareholder payments at risk during economic difficulty. TEGNA's soundness measures are positive:
- Good Liquidity: The company shows very good short-term financial room, with a Current Ratio and Quick Ratio both at 2.22. This shows a strong ability to cover near-term debts and is with the best in its area.
- Controlled Solvency: TEGNA's debt levels seem controlled. Its Debt-to-Equity ratio of 0.81 matches the field, and its Altman-Z score points to a very small near-term chance of financial trouble.
- Actions Favorable to Shareholders: The report mentions a decrease in shares outstanding over the last one and five years, a signal of capital return through buybacks that can work together with dividend growth.
This sound health rating finishes the selection trio. It means that even in a difficult setting for the media area, TEGNA's financial condition supplies the steadiness needed to continue its dividend program.
Valuation and Growth Points
From a valuation view, TEGNA seems fairly valued. Its Price-to-Earnings (P/E) ratio near 8 and forward P/E of 6.2 are much lower than both the wider market and field averages, suggesting the stock is not priced high. Still, investors should see the fundamental report notes an absence of growth, with forecasts for small declines in both sales and earnings soon. This is a usual situation in value-focused, high-yield areas and highlights the value of the company's good earnings and soundness in supporting the dividend during a possible business cycle dip.
Finding Other Dividend Possibilities
TEGNA INC shows an example of how a systematic filter can find companies that match central dividend investing ideas. Its appealing yield, supported by good earnings and a sound balance sheet, makes it a notable candidate for portfolios focused on income.
For investors wishing to do their own study and find other companies that fit similar standards of high dividend reliability, good earnings, and firm financial soundness, you can examine the fully set Best Dividend Stocks screen.
Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any security. Investing has risk, including the possible loss of original investment. You should do your own research and talk with a qualified financial advisor before making any investment choices.
