Tenaris SA-ADR (NYSE:TS) – A High-Yield Dividend Stock with Strong Profitability and Financial Health

Dividend investors frequently look for stocks that provide steady payouts, maintainable yields, and sound financial conditions to secure income stability over time. One approach to find these stocks involves applying a dividend-focused screening method that highlights high dividend ratings while keeping strong profitability and financial health measures. Tenaris SA-ADR (NYSE:TS) appears as a potential choice from this screen, displaying traits that match these standards.

Why Tenaris SA-ADR (TS) Attracts Dividend Investors

1. Impressive Dividend Characteristics

Tenaris SA-ADR provides a notable dividend yield of 4.43%, higher than both the industry average (3.91%) and the S&P 500 average (2.40%). This makes it a strong option for investors focused on income. Key features of its dividend appeal are:

• Steady Dividend Growth: The firm has raised its dividend at an annual rate of 10.42% over the last five years, showing dedication to shareholder returns.
• Dependable History: Tenaris has distributed dividends for at least 10 straight years, confirming its reliability as an income stock.
• Reasonable Payout Ratio: At 41.95%, the payout ratio indicates dividends are supported by earnings, lowering the chance of reductions even if earnings vary.

These elements fit the screening method’s focus on maintainable and increasing dividends, helping investors avoid high yields that may not last.

2. Strong Profitability Backs Dividend Reliability

A high dividend rating isn’t sufficient on its own—profitability ensures the company can sustain and expand payouts. Tenaris performs well here with a ChartMill Profitability Rating of 9/10, backed by:

• High Margins: A profit margin of 15.05% places it in the top 12% of its sector, while its operating margin (17.56%) exceeds 80% of competitors.
• Solid Returns: Its Return on Assets (8.76%) and Return on Invested Capital (9.58%) are significantly better than industry averages, showing effective use of capital.

These figures are vital for dividend investors since strong profitability lessens the likelihood of dividend reductions and allows for future growth.

3. Outstanding Financial Condition

Dividend consistency also relies on a company’s financial strength. Tenaris holds a perfect ChartMill Health Rating of 10/10, reflecting:

• Minimal Debt: A Debt/Equity ratio of only 0.01 means the company has almost no debt, reducing financial risks.
• Ample Liquidity: A Current Ratio of 4.08 and Quick Ratio of 2.53 show it can easily handle short-term obligations.
• Altman-Z Score of 5.82: This indicates very low bankruptcy risk, offering additional confidence in dividend continuity.

A sturdy financial standing ensures Tenaris can handle economic challenges without threatening payouts, a crucial factor for long-term dividend plans.

4. Valuation: A Cushion for Investors

Though not the main priority for dividend investors, valuation is important when evaluating entry points. Tenaris trades at a P/E ratio of 9.54, lower than 84% of its industry peers, and a forward P/E of 7.92, hinting at undervaluation compared to growth potential. This offers a safety net for investors targeting both income and possible price gains.

Possible Risks to Watch

• Earnings Drop: Recent declines in EPS and revenue (-22.13% and -15.77%, respectively) need attention, though the solid balance sheet eases immediate concerns.
• Sector Volatility: As a supplier to the oil and gas industry, Tenaris faces energy market swings, which could affect earnings and, indirectly, dividends.

Finding More Dividend Options

Tenaris SA-ADR is one of many stocks that meet strict dividend, profitability, and health criteria. Investors searching for more ideas can explore the Best Dividend Stocks screener, which lists top-tier dividend payers.

For a closer look at Tenaris’ fundamentals, check its full Fundamental Analysis Report.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.