Zimmer Biomet Holdings Inc. (NYSE:ZBH) Offers a Reliable Dividend Backed by Steady Fundamentals

For investors aiming to create a portfolio that produces steady passive income, a methodical screening process is necessary. A frequent tactic includes searching 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 usually requires examining more than just the current yield to evaluate the condition and earnings power of the business. One technique is to apply a multi-factor filter that finds stocks with a high dividend grade, aided by satisfactory marks in earnings power and balance sheet condition. This method tries to remove companies where a high yield could signal trouble, concentrating instead on those with the business steadiness to maintain their payouts to shareholders.

Zimmer Biomet Holdings Inc. (NYSE:ZBH), a worldwide frontrunner in creating and making orthopedic reconstructive products, appears as a result from this kind of screening process. The company’s outline indicates a business with a lengthy history and a concentration on medical technologies, which contains an increasing set of digital and robotic surgery tools. For a dividend investor, the central question is if this settled company can be a steady source of income. A review of its fundamental report shows that ZBH makes a strong case, mixing a decent dividend with the business measures that point to longevity.

Dividend Profile: A Focus on Reliability

The heart of any dividend investment idea rests on the payment itself. Zimmer Biomet’s dividend traits, as described in its fundamental analysis report, point to a profile constructed more on steadiness than fast increase.

• Yield and Payout Sustainability: The company provides a dividend yield of 1.07%. This is less than the present mean for the S&P 500, yet it is clearly high inside its own field, beating 94% of similar companies in the Health Care Equipment & Supplies industry. More significantly, the longevity of this payment seems solid. Zimmer Biomet uses only 23.7% of its earnings for dividends, a cautious percentage that gives plenty of space to put money back into the business and handle economic slowdowns without putting the dividend at risk.
• Track Record and Growth: The company has built a steady history, having paid and not cut its dividend for at least ten straight years. This past performance is an important sign of management’s dedication to giving capital back to shareholders. The yearly dividend increase rate has been small at 0.19%, but it is aided by the fact that the company’s earnings are increasing more quickly. This link is key for the screening plan, as it shows the dividend increase is lasting and is not being financed by debt or selling assets.

Supporting Fundamentals: Profitability and Financial Health

A high dividend grade by itself is insufficient; it must be aided by a sound business. The screening standards of "satisfactory profitability and health" are important because they evaluate the source that pays for the dividend. Zimmer Biomet’s marks in these areas give background for its dividend steadiness.

Profitability Metrics: Zimmer Biomet receives a ChartMill Profitability Rating of 6. The company shows good operational effectiveness with margins that stack up well against industry competitors.

• Its Operating Margin of 19.1% is higher than 91% of the industry.
• The Gross Margin of 71.44% and Profit Margin of 10.05% also place in the upper levels of its sector. These good margins show the company has control over pricing and costs, which are needed for creating the reliable earnings required to aid dividend payments over many years.

Financial Health Assessment: With a ChartMill Health Rating of 5, the company’s financial state is viewed as middling. This is a central step for the screening plan, as it helps steer clear of companies with excessively high debt. The review shows a varied situation:

• Liquidity is good: A Current Ratio of 2.43 shows ZBH can easily meet its near-term bills.
• Solvency needs watching: The company holds a middling amount of debt, with a Debt/Equity ratio of 0.59. While the Debt-to-Free-Cash-Flow ratio of 7.17 years is above the preferred level, it is still higher than 75% of its industry competitors. This indicates that while debt exists, it is not unusual for the sector and is handled next to good cash flow production.

Valuation Context

For income investors, valuation is important because paying too much for a stock can cancel out the gains from its dividend yield. Zimmer Biomet seems fairly priced, which increases its attractiveness. The stock sells at a Price-to-Earnings (P/E) ratio of 11.13, which is much lower than both the wider S&P 500 mean and most of its industry competitors. This pricing, combined with the dividend, suggests investors are not paying extra for the income, possibly giving a buffer.

Is Zimmer Biomet a Fit for a Dividend Portfolio?

Zimmer Biomet Holdings Inc. represents the kind of company a specific dividend screen hopes to find. It is not a high-yield, high-risk idea, but rather a result giving a sensible yield aided by ten years of steady payments, a lasting payout ratio, and the support of good profitability measures. The company’s settled place in the medical device industry gives a level of defensive steadiness. While its dividend increase has been very small lately and its debt level deserves notice, the complete fundamental view matches a plan that favors reliable income and business quality over risky yield-seeking.

This review of ZBH came from a structured screening process. Investors wanting to examine other companies that fit similar standards of high dividend quality, satisfactory profitability, and balance sheet condition can see the complete set of results using the Best Dividend Stocks screen.

---

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented is based on data provided and should not be the sole basis for any investment decision. Investors should conduct their own thorough research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.