ZIMMER BIOMET HOLDINGS INC (NYSE:ZBH) - A Reliable Dividend Stock Worth Considering

ZIMMER BIOMET HOLDINGS INC (NYSE:ZBH) was identified by our Best Dividend Stocks screen as a company with strong dividend characteristics, solid profitability, and reasonable financial health. The medical device manufacturer stands out for its consistent dividend history and sustainable payout ratio, making it a candidate for income-focused investors.

Dividend Strength

• Yield & Industry Comparison: ZBH offers a dividend yield of 1.05%, which is modest but better than 94.12% of its peers in the Health Care Equipment & Supplies industry. While it falls short of the S&P 500 average yield of 2.42%, its reliability compensates for the lower payout.
• Track Record: The company has paid dividends for at least 10 years without reductions, demonstrating commitment to shareholders.
• Payout Sustainability: Only 21.28% of earnings are allocated to dividends, indicating room for future increases. Earnings growth also outpaces dividend growth, reinforcing sustainability.

Profitability & Financial Health

• Strong Margins: ZBH boasts an Operating Margin of 19.59%, outperforming 92.51% of industry competitors. Its Gross Margin (71.05%) is also well above average.
• Return Metrics: The company delivers solid returns, including a Return on Assets (4.12%) and Return on Equity (7.37%), ranking in the top tiers of its sector.
• Financial Stability: While debt levels are manageable (Debt/Equity of 0.53), liquidity is healthy with a Current Ratio of 2.44, ensuring short-term obligations are covered.

Valuation

ZBH appears reasonably priced with a P/E ratio of 11.90, significantly below both the industry (29.04) and S&P 500 (27.45) averages. Its Price/Free Cash Flow ratio also suggests undervaluation relative to peers.

For a deeper look, review the full fundamental report on ZBH.

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Disclaimer

This is not investing advice. The observations here are based on current data, but investors should conduct their own research before making decisions.