MAXIMUS INC (NYSE:MMS) showed up on a Best Dividend screen, a strategy that targets stocks with high dividend ratings while maintaining sufficient profitability and financial health. The aim of this approach is to avoid the common trap of chasing yield in a company with underlying problems that might force a dividend cut. By filtering for ratings of 7 or higher on the ChartMill Dividend scale, combined with minimum Profitability and Health ratings of 5, the screen attempts to isolate income opportunities that rest on a sound fundamental base.
A Dividend Profile Backed by Strong Fundamentals
MMS earns an 8 out of 10 on the ChartMill Dividend Rating. Digging into the components of that score reveals why this stock stands out for income-oriented investors.
The current dividend yield sits at 2.33%. That’s not an eye-popping number on its own, but context matters. The average S&P 500 yield is 1.76%, and within its own IT Services industry, MMS pays more than 84% of peers, who average just 1.63%. More importantly for sustainability, the payout ratio is a very conservative 18.19% of net income. That means the company keeps the vast majority of its earnings for reinvestment, debt reduction, or share buybacks, and there is plenty of room for the dividend to be maintained even if earnings dip.
The dividend also comes with a track record. MMS has paid and maintained—without a single decrease—for at least ten years. The 5-year annualized dividend growth rate is around 1.30%, which is modest. However, the fundamental report notes that earnings are growing faster than the dividend, which is actually a healthy sign: it means the payout is not being forced and future increases remain possible.
Profitability and Health Support the Payout
A high yield is only useful if the company can sustain it. That is why the Best Dividend screen requires a ChartMill Profitability Rating of at least 5 and a Health Rating of at least 5. MMS exceeds both thresholds.
With a Profitability Rating of 7, MMS shows strong returns on capital. Its Return on Equity (22.00%) and Return on Invested Capital (12.07%) both beat roughly 80% of industry peers. Operating margins have grown nicely over the last few years, and the company has been consistently profitable with positive operating cash flow going back at least five years. These are the kinds of markers that suggest a business generating real, recurring cash.
The Health Rating of 7 further confirms the company is not overstretched. The Altman-Z score of 3.03 indicates very low bankruptcy risk, and the current ratio of 2.21 provides a comfortable liquidity cushion. The debt-to-equity ratio of 0.87 is moderate, not alarming. All of this supports the idea that the dividend is not being paid at the expense of the balance sheet.
Valuation Adds to the Case
One of the more attractive aspects for dividend investors is the valuation. MMS trades at a P/E ratio of just 7.57, which is well below the S&P 500 average of 26.52 and cheaper than 82% of its industry peers. The forward P/E drops even further to 6.36, implying that earnings are expected to grow. The PEG ratio also suggests compensation for that growth, making the stock look inexpensive relative to its earnings trajectory. An attractive entry price can enhance the effective yield for new buyers and provides a margin of safety.
More Candidates to Explore
MMS is only one result from a broader screening method. Investors looking for other high-dividend stocks that also pass minimum profitability and health filters can run the same Best Dividend screen here. The screener is fully customizable, allowing you to adjust limits on market cap, volume, or index membership to fit your own criteria.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always perform your own research before making any investment decisions.
Read full article here »
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MAXIMUS Inc (NYSE:MMS) Presents a High-Quality Dividend Stock with Strong Fundamentals
MAXIMUS INC (NYSE:MMS) showed up on a Best Dividend screen, a strategy that targets stocks with high dividend ratings while maintaining sufficient profitability and financial health. The aim of this approach is to avoid the common trap of chasing yield in a company with underlying problems that might force a dividend cut. By filtering for ratings of 7 or higher on the ChartMill Dividend scale, combined with minimum Profitability and Health ratings of 5, the screen attempts to isolate income opportunities that rest on a sound fundamental base.
A Dividend Profile Backed by Strong Fundamentals
MMS earns an 8 out of 10 on the ChartMill Dividend Rating. Digging into the components of that score reveals why this stock stands out for income-oriented investors.
The current dividend yield sits at 2.33%. That’s not an eye-popping number on its own, but context matters. The average S&P 500 yield is 1.76%, and within its own IT Services industry, MMS pays more than 84% of peers, who average just 1.63%. More importantly for sustainability, the payout ratio is a very conservative 18.19% of net income. That means the company keeps the vast majority of its earnings for reinvestment, debt reduction, or share buybacks, and there is plenty of room for the dividend to be maintained even if earnings dip.
The dividend also comes with a track record. MMS has paid and maintained—without a single decrease—for at least ten years. The 5-year annualized dividend growth rate is around 1.30%, which is modest. However, the fundamental report notes that earnings are growing faster than the dividend, which is actually a healthy sign: it means the payout is not being forced and future increases remain possible.
Profitability and Health Support the Payout
A high yield is only useful if the company can sustain it. That is why the Best Dividend screen requires a ChartMill Profitability Rating of at least 5 and a Health Rating of at least 5. MMS exceeds both thresholds.
With a Profitability Rating of 7, MMS shows strong returns on capital. Its Return on Equity (22.00%) and Return on Invested Capital (12.07%) both beat roughly 80% of industry peers. Operating margins have grown nicely over the last few years, and the company has been consistently profitable with positive operating cash flow going back at least five years. These are the kinds of markers that suggest a business generating real, recurring cash.
The Health Rating of 7 further confirms the company is not overstretched. The Altman-Z score of 3.03 indicates very low bankruptcy risk, and the current ratio of 2.21 provides a comfortable liquidity cushion. The debt-to-equity ratio of 0.87 is moderate, not alarming. All of this supports the idea that the dividend is not being paid at the expense of the balance sheet.
Valuation Adds to the Case
One of the more attractive aspects for dividend investors is the valuation. MMS trades at a P/E ratio of just 7.57, which is well below the S&P 500 average of 26.52 and cheaper than 82% of its industry peers. The forward P/E drops even further to 6.36, implying that earnings are expected to grow. The PEG ratio also suggests compensation for that growth, making the stock look inexpensive relative to its earnings trajectory. An attractive entry price can enhance the effective yield for new buyers and provides a margin of safety.
More Candidates to Explore
MMS is only one result from a broader screening method. Investors looking for other high-dividend stocks that also pass minimum profitability and health filters can run the same Best Dividend screen here. The screener is fully customizable, allowing you to adjust limits on market cap, volume, or index membership to fit your own criteria.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always perform your own research before making any investment decisions.
Read full article here »