The "Best Dividend Stocks" screen is designed to identify companies that offer a strong income proposition without forcing investors to accept weak underlying business quality. The logic is straightforward: target stocks with a high ChartMill Dividend Rating, which signals strong dividend characteristics, but only after ensuring the company is both sufficiently profitable and financially healthy. This avoids the common trap of chasing a high yield from a distressed company where the dividend is at risk. Filtering for a minimum ChartMill Health Rating of 5 and a minimum ChartMill Profitability Rating of 5 acts as a safety net, ensuring the dividend is being paid by a viable business.
Commercial Metals Co. (NYSE:CMC) is a prime example of a stock that passes this screen and offers a balanced profile for dividend investors. This company manufactures and recycles steel and metal products, supplying the construction, industrial, and energy sectors. It currently has a ChartMill Fundamental Rating of 6 out of 10, and a detailed breakdown of its financial health is available in the full fundamental analysis report.
A Closer Look at the Dividend Profile
The core reason CMC qualifies for this screen is its strong ChartMill Dividend Rating of 7, which indicates a top-tier dividend profile. When we break down the components of that rating, the picture becomes quite clear for an income-focused investor.
- Dividend Growth and History: The dividend has grown at an average annual rate of 8.46% over the last five years. More importantly, CMC has paid a dividend without decreasing it for at least 10 years. This long track record of consistent and growing payouts provides the reliability dividend investors seek.
- Exceptional Sustainability: This is perhaps the most critical factor. CMC’s payout ratio is a very low 13.82%, meaning it only uses a small fraction of its earnings to fund the dividend. This low payout ratio, combined with the fact that earnings are growing faster than the dividend, makes the current payout and its future growth look highly sustainable.
- Current Yield: The yearly dividend yield stands at 1.33%. While this is slightly below the S&P 500 average, it is above the average for its industry peers. It represents a reasonable, baseline income return that is well-supported by the company’s finances.
Profitability and Health as Supporting Pillars
The screen’s secondary filters confirm that the dividend is not an anomaly. A ChartMill Profitability Rating of 5 and a Health Rating of 5 ensure the business is stable enough to support the payout.
On the profitability side, CMC has been consistently profitable with positive operating cash flow for the past five years. While its margins have seen some decline, the company still delivers a Return on Equity of 13.13% and a Return on Assets of 6.07%, outperforming the majority of its industry peers. These metrics show that the company can generate adequate profits to reinvest in the business and reward shareholders.
In terms of financial health, the company shows mixed signals but passes the minimum threshold. It has a solid Current Ratio of 2.33, indicating strong short-term liquidity. The Debt/Equity ratio of 0.73 and an Altman-Z score in the grey zone suggest a moderate reliance on debt, but the company’s ability to generate cash flow keeps it from being a major concern for the dividend’s safety.
Why This Matters for Your Strategy
The combination of these factors aligns perfectly with the goals of the Best Dividend screen. You are not simply buying the highest yield; you are buying a company where the dividend has a history of growth, is clearly sustainable based on a low payout ratio, and is backed by a business that is profitable and reasonably healthy. This integrated approach provides a stronger foundation for building a resilient income portfolio.
For those looking to find similar opportunities, the full list of stocks meeting these criteria is available. You can run the Best Dividend Stocks screener to see more results and compare candidates yourself.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. All investments carry risk, and past performance is not a guarantee of future results. You should conduct your own research and consult with a financial advisor before making any investment decisions.
Read full article here »
View the Zacks #1 Rank List
Commercial Metals Co. (NYSE:CMC) Offers a High-Quality Dividend Stock for Income Investors
The "Best Dividend Stocks" screen is designed to identify companies that offer a strong income proposition without forcing investors to accept weak underlying business quality. The logic is straightforward: target stocks with a high ChartMill Dividend Rating, which signals strong dividend characteristics, but only after ensuring the company is both sufficiently profitable and financially healthy. This avoids the common trap of chasing a high yield from a distressed company where the dividend is at risk. Filtering for a minimum ChartMill Health Rating of 5 and a minimum ChartMill Profitability Rating of 5 acts as a safety net, ensuring the dividend is being paid by a viable business.
Commercial Metals Co. (NYSE:CMC) is a prime example of a stock that passes this screen and offers a balanced profile for dividend investors. This company manufactures and recycles steel and metal products, supplying the construction, industrial, and energy sectors. It currently has a ChartMill Fundamental Rating of 6 out of 10, and a detailed breakdown of its financial health is available in the full fundamental analysis report.
A Closer Look at the Dividend Profile
The core reason CMC qualifies for this screen is its strong ChartMill Dividend Rating of 7, which indicates a top-tier dividend profile. When we break down the components of that rating, the picture becomes quite clear for an income-focused investor.
Profitability and Health as Supporting Pillars
The screen’s secondary filters confirm that the dividend is not an anomaly. A ChartMill Profitability Rating of 5 and a Health Rating of 5 ensure the business is stable enough to support the payout.
On the profitability side, CMC has been consistently profitable with positive operating cash flow for the past five years. While its margins have seen some decline, the company still delivers a Return on Equity of 13.13% and a Return on Assets of 6.07%, outperforming the majority of its industry peers. These metrics show that the company can generate adequate profits to reinvest in the business and reward shareholders.
In terms of financial health, the company shows mixed signals but passes the minimum threshold. It has a solid Current Ratio of 2.33, indicating strong short-term liquidity. The Debt/Equity ratio of 0.73 and an Altman-Z score in the grey zone suggest a moderate reliance on debt, but the company’s ability to generate cash flow keeps it from being a major concern for the dividend’s safety.
Why This Matters for Your Strategy
The combination of these factors aligns perfectly with the goals of the Best Dividend screen. You are not simply buying the highest yield; you are buying a company where the dividend has a history of growth, is clearly sustainable based on a low payout ratio, and is backed by a business that is profitable and reasonably healthy. This integrated approach provides a stronger foundation for building a resilient income portfolio.
For those looking to find similar opportunities, the full list of stocks meeting these criteria is available. You can run the Best Dividend Stocks screener to see more results and compare candidates yourself.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. All investments carry risk, and past performance is not a guarantee of future results. You should conduct your own research and consult with a financial advisor before making any investment decisions.
Read full article here »