For investors looking for a dependable source of passive income, a methodical screening process is important. One useful method involves selecting for companies that provide a good dividend now and also have the fundamental financial soundness to maintain and possibly increase those payments in the future. This method frequently concentrates on stocks with favorable dividend ratings, which evaluate elements such as yield, growth record, and payment sustainability, while also demanding adequate scores in earnings power and balance sheet condition. This pairing helps to sidestep the pitfall of high-yield stocks that could be hiding basic problems. TEGNA INC (NYSE:TGNA), a well-known media company, recently appeared from such a screen, offering an example of balancing income with business steadiness.
A Good Dividend Profile
Central to the attraction for income investors is TEGNA's dividend, which receives a firm ChartMill Dividend Rating of 7. This rating combines a number of important measures into one, practical score.
- Good and Increasing Yield: The company now provides a yearly dividend yield of 2.41%. This is higher than the average yield of its media industry competitors (1.12%) and also exceeds the present S&P 500 average of about 1.80%. Significantly, this income has a record of growth, with the dividend rising at a notable annualized rate of 11.34% over the last five years.
- Established History: Dependability is critical for dividend investors. TEGNA has paid dividends without interruption for at least ten years and has not lowered its payment in the last five years, showing a dedication to giving capital back to shareholders across different market periods.
- Maintainable Payment: A high yield is irrelevant if it cannot be continued. Here, TEGNA displays notable soundness, with only 23.42% of its profits used for dividend payments. This low payout ratio offers a significant cushion, confirming the dividend is secure and allows plenty of opportunity for the company to fund its operations or manage short-term profit changes.
The Base: Earnings Power and Balance Sheet Condition
A maintainable dividend is not isolated; it is paid for by a company's profits and safeguarded by its financial position. This is why screening for adequate earnings and condition ratings is a vital step in the method. TEGNA performs well in these fundamental areas, which bolsters the positive dividend view.
Earnings Power: TEGNA gets a high ChartMill Profitability Rating of 8, meaning it is more profitable than most companies in its field. Important measures highlight this:
- The company has a strong operating margin of 20.88%, doing better than 95.6% of its industry competitors.
- Its return on invested capital (ROIC) of 7.32% is also a leading figure, meaning effective use of capital to create profits.
This steady earnings power is the source that creates the cash needed to pay and increase the dividend dependably.
Notable Balance Sheet Condition: Possibly even more persuasive for risk-conscious investors is TEGNA's ChartMill Health Rating of 8. The company's financial position displays clear soundness, especially in liquidity:
- Both its Current Ratio and Quick Ratio are at a very good 2.22, meaning more than twice the short-term assets required to cover near-term debts. This puts it in the leading group of its industry.
- Solvency figures are also good, with an Altman-Z score of 3.11 indicating a low near-term bankruptcy chance and a debt-to-equity ratio of 0.81 that matches industry standards.
This financial sturdiness suggests TEGNA is not likely to encounter cash shortages that could endanger its dividend plan, even in a difficult economic climate.
Price and Expansion Factors
From a price standpoint, TEGNA seems fairly valued. With a Price-to-Earnings (P/E) ratio of 8.86 and a forward P/E of 6.76, the stock is priced lower than most of its industry competitors and the wider market. This pricing could be viewed as interesting, particularly when combined with its solid earnings power and dividend.
The main note of care for investors is in the expansion group, where TEGNA's rating is poor. The company's income has experienced a small recent drop, and analyst projections indicate anticipated decreases in both profits and income in the next few years. This highlights that TEGNA is mainly an income and value case instead of an expansion story. For a dividend-centered method, however, the focus is on the maintainability of the payment, which the high earnings power and low payout ratio seem to protect in spite of the quiet expansion view.
Conclusion
TEGNA INC offers an interesting profile for dividend-focused investors who value safety and maintainability together with yield. It meets the requirements of a screen made to find companies with a good dividend history supported by business and financial durability. Its good and increasing yield, low payout ratio, and ten-year payment record are backed by leading earnings margins and a notably liquid financial position. While future expansion projections are limited, the company's present financial soundness indicates its dividend is constructed on a firm base.
For investors wanting to examine other companies that fit similar standards of high dividend quality, adequate earnings power, and sound balance sheet condition, the pre-configured "Best Dividend" screen can act as a beginning point for more study.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. The fundamental report data referenced is available here.
