For investors aiming to build a portfolio focused on creating steady passive income, a methodical screening process is important. One useful strategy involves looking for companies that not only provide a good dividend now but also have the basic financial soundness to maintain and possibly raise those payments in the future. This method chooses quality and durability over seeking the highest available yield, which can sometimes indicate hidden business problems. A functional way to apply this is by using a multi-factor screen that finds stocks with a high total dividend score, along with good marks for earnings and balance sheet soundness.
Winnebago Industries (NYSE:WGO), a top producer of recreational vehicles and marine products, recently appeared as a result from this kind of methodical search. The company’s basic financial picture suggests it may deserve more attention from income-oriented investors.
Examining the Dividend Details
The main attraction for dividend investors is Winnebago’s steady and increasing return of capital to shareholders. The company’s dividend numbers show a pattern of dedication and increase, which are important for a lasting income plan.
- Yield and Increase: Winnebago presently has a forward dividend yield near 3.04%. This yield is higher than the S&P 500 average and sits in the better part of its automotive industry group. More notably, the company has shown a clear dedication to raising its payment, with an average yearly dividend increase rate of 25% over the last five years. A history of steady raises is a sign of a management team focused on shareholders and a business able to produce extra cash.
- Consistency: Durability is key. Winnebago has paid dividends for more than ten years without a cut, establishing a dependable history that income investors appreciate. This record points to a corporate priority of giving capital back to shareholders through different periods.
- A Point on Durability: The review does note one item for investor attention: the present payout ratio, which compares dividends to earnings, is high above 100%. This means recent dividends were more than net income, a situation usually not lasting forever. However, this number uses the last twelve months of earnings, which have been weak. Importantly, the basic report also states that Winnebago’s earnings are predicted to rise quicker than its dividend soon, which would normally lower this ratio to a better level if those forecasts happen.
Supporting Basics: Soundness and Earnings
A high dividend score by itself is insufficient; it needs backup from a sound business. This is where the screen’s other filters for acceptable earnings and soundness show their value, as they help sidestep companies that could be paying dividends from debt or shrinking reserves.
- Balance Sheet Soundness: Winnebago gets a good Soundness rating of 8 out of 10. The company shows very good solvency, with an Altman-Z score firmly in the safe area and an acceptable debt-to-equity ratio. Its liquidity is also good, with a current ratio showing enough ability to meet near-term bills. A solid balance sheet gives the steadiness required to keep dividend payments during economic drops or industry weak periods, a major factor for the cyclical recreational vehicle sector.
- Earnings: The company has an Earnings rating of 6. While recent profit margins have tightened—a frequent occurrence across manufacturing industries—Winnebago’s return measures like Return on Assets and Return on Invested Capital still look better than most industry rivals. This shows the company stays capable at creating profits from its investments, which is the final source for financing future dividends.
Price and Increase Background
From a price standpoint, Winnebago seems fairly valued inside its industry. Important measures like Price/Forward Earnings and Enterprise Value/EBITDA are lower than many of its peers. Also, analysts predict a notable rise in earnings increase over the next few years. This mix of fair price and good expected earnings increase gives a possible two-part advantage: it provides a buffer for the dividend investor and the chance for share price gain next to income.
For a complete look at all these basic factors, you can see the full ChartMill Fundamental Analysis Report for WGO.
Is It Suitable for Your Portfolio?
Winnebago Industries presents an interesting example of a stock that meets a quality dividend screen. It provides a yield above the market average, a good history of dividend increases, and is supported by a financially sound company with acceptable earnings. The high payout ratio is something to watch, but it is explained by good expected earnings increase. For an investor whose plan mixes present income with durable business basics, WGO stands as a noteworthy option for more study.
This review of Winnebago Industries came from a systematic screen for quality dividend payers. If you want to examine other companies that fit similar standards of high dividend score, acceptable earnings, and good balance sheet soundness, you can use the same screen yourself. Find more possible results from the "Best Dividend Stocks" screen here.
,
Disclaimer: This article is for informational and educational purposes only and does not form financial advice, investment suggestion, or an offer or request to buy or sell any securities. The review is based on given data and shows the author's understanding. Investors should do their own research and think about their personal financial situation and risk comfort before making any investment choice. Past results and basic ratings are not promises of future outcomes.
