Dividend investing requires a method that balances current income with the long-term safety of that payout. Chasing the highest yield alone can be a trap if the underlying business is weak or the dividend is unsustainable. A more effective approach uses a stock screener to filter for companies that combine a strong dividend rating with adequate profitability and financial health, ensuring the yield is supported by a solid operational foundation. This is the strategy behind the Best Dividend Stocks screen, which applies minimum thresholds for trading volume, price, health, profitability, and a high dividend rating to surface candidates worth a closer look.
One stock that consistently appears in this screen is Bristol Myers Squibb Co (NYSE:BMY), a major biopharmaceutical company with a diversified portfolio spanning oncology, immunology, and cardiovascular medicine.
A Strong Dividend Profile with Notable Yields
For income-focused investors, the most immediate attraction is BMY’s dividend. The company offers a yearly dividend yield of 4.35%, which is substantially higher than the S&P 500 average of just 1.76% and puts it ahead of more than 95% of its peers in the Pharmaceuticals industry. This is not a temporary payout either. BMY has paid a dividend for at least the last 10 years and has grown that dividend at an annual rate of 6.51% over that period, demonstrating a clear commitment to returning capital to shareholders.
A closer look at the ChartMill Fundamental Report reveals the mechanics behind this score. The dividend rating of 7 out of 10 is driven by the high absolute yield and a strong history of growth. However, investors should pay close attention to the sustainability component. The current payout ratio sits at 84.88%, meaning a very large portion of earnings is being used to fund the dividend. Furthermore, the report flags that earnings are declining while the dividend rate has been growing, which is a divergence that requires monitoring. This tension between a generous payout and a strained payout ratio is a central point of analysis for any dividend investor considering this name.
Solid Profitability Supporting the Business
A high dividend is only as good as the business that pays it. This is where BMY’s Profitability rating of 8 out of 10 becomes critical. The company’s margins are excellent across the board: an Operating Margin of 40.73% and a Gross Margin of 71.76% both rank among the best in its industry. More importantly, these margins have been growing in recent years, suggesting operational efficiency is improving.
The company also generates strong returns on capital. With a Return on Equity of 29.76% and a Return on Invested Capital of 16.53%, BMY outperforms over 93% of its industry peers. These profitability metrics provide the underlying engine that has historically fueled the dividend payments and provide a buffer when earnings face pressure.
Adequate Health, But Not Without Concerns
The screen requires a minimum Health Rating of 5, and BMY lands right on that threshold. On the positive side, the company has a strong solvency picture in some key areas. Its Debt to Free Cash Flow ratio of 3.73 is a healthy figure and better than 88% of peers, indicating it could theoretically pay off all its debt in under four years using operating cash flow.
The areas of concern lie in liquidity. A Current Ratio of 1.42 and a Quick Ratio of 1.28 are adequate for meeting short-term obligations, but they trail behind the majority of the industry. Additionally, the Debt to Equity ratio of 2.12 is on the high side, signaling a significant reliance on debt financing. While these factors are not alarming on their own, they reinforce the need to keep a close watch on the company’s ability to service its debt, especially if earnings continue to decline.
Connecting the Dots for the Strategy
The Best Dividend screen is designed to surface stocks where the income story is backed by quality. In BMY’s case, the high dividend yield and long history of growth are supported by an 8/10 Profitability rating, which provides the earnings power necessary to sustain payouts. The Health rating of 5/10 acts as a gatekeeper; it is not the highest score, but it is sufficient to exclude companies with severe financial distress.
The valuation also adds context. With a Price/Earnings ratio of 10.24—far below both the industry average of 40 and the S&P 500—the stock is priced cheaply, which can make the dividend yield even more attractive on a cost basis. The core challenge for dividend investors assessing BMY is balancing the cheap valuation and strong profitability against the high payout ratio and declining earnings trend.
To explore the full financial details behind this analysis, you can read the full fundamental analysis report for BMY.
Broader Opportunities
BMY is just one example of the stocks that can be uncovered using this disciplined screening approach. The screen applies the exact filters described above—minimum volume, price, health, profitability, and a high dividend rating—to generate a list of candidates across the market. You can run the Best Dividend Stocks screen here to see the full list of results and begin your own evaluation.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. All investment decisions should be made based on your own research and risk tolerance.
Read full article here »
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Bristol Myers Squibb Co (NYSE:BMY): A High Yield Dividend Stock Backed by Strong Profitability
Dividend investing requires a method that balances current income with the long-term safety of that payout. Chasing the highest yield alone can be a trap if the underlying business is weak or the dividend is unsustainable. A more effective approach uses a stock screener to filter for companies that combine a strong dividend rating with adequate profitability and financial health, ensuring the yield is supported by a solid operational foundation. This is the strategy behind the Best Dividend Stocks screen, which applies minimum thresholds for trading volume, price, health, profitability, and a high dividend rating to surface candidates worth a closer look.
One stock that consistently appears in this screen is Bristol Myers Squibb Co (NYSE:BMY), a major biopharmaceutical company with a diversified portfolio spanning oncology, immunology, and cardiovascular medicine.
A Strong Dividend Profile with Notable Yields
For income-focused investors, the most immediate attraction is BMY’s dividend. The company offers a yearly dividend yield of 4.35%, which is substantially higher than the S&P 500 average of just 1.76% and puts it ahead of more than 95% of its peers in the Pharmaceuticals industry. This is not a temporary payout either. BMY has paid a dividend for at least the last 10 years and has grown that dividend at an annual rate of 6.51% over that period, demonstrating a clear commitment to returning capital to shareholders.
A closer look at the ChartMill Fundamental Report reveals the mechanics behind this score. The dividend rating of 7 out of 10 is driven by the high absolute yield and a strong history of growth. However, investors should pay close attention to the sustainability component. The current payout ratio sits at 84.88%, meaning a very large portion of earnings is being used to fund the dividend. Furthermore, the report flags that earnings are declining while the dividend rate has been growing, which is a divergence that requires monitoring. This tension between a generous payout and a strained payout ratio is a central point of analysis for any dividend investor considering this name.
Solid Profitability Supporting the Business
A high dividend is only as good as the business that pays it. This is where BMY’s Profitability rating of 8 out of 10 becomes critical. The company’s margins are excellent across the board: an Operating Margin of 40.73% and a Gross Margin of 71.76% both rank among the best in its industry. More importantly, these margins have been growing in recent years, suggesting operational efficiency is improving.
The company also generates strong returns on capital. With a Return on Equity of 29.76% and a Return on Invested Capital of 16.53%, BMY outperforms over 93% of its industry peers. These profitability metrics provide the underlying engine that has historically fueled the dividend payments and provide a buffer when earnings face pressure.
Adequate Health, But Not Without Concerns
The screen requires a minimum Health Rating of 5, and BMY lands right on that threshold. On the positive side, the company has a strong solvency picture in some key areas. Its Debt to Free Cash Flow ratio of 3.73 is a healthy figure and better than 88% of peers, indicating it could theoretically pay off all its debt in under four years using operating cash flow.
The areas of concern lie in liquidity. A Current Ratio of 1.42 and a Quick Ratio of 1.28 are adequate for meeting short-term obligations, but they trail behind the majority of the industry. Additionally, the Debt to Equity ratio of 2.12 is on the high side, signaling a significant reliance on debt financing. While these factors are not alarming on their own, they reinforce the need to keep a close watch on the company’s ability to service its debt, especially if earnings continue to decline.
Connecting the Dots for the Strategy
The Best Dividend screen is designed to surface stocks where the income story is backed by quality. In BMY’s case, the high dividend yield and long history of growth are supported by an 8/10 Profitability rating, which provides the earnings power necessary to sustain payouts. The Health rating of 5/10 acts as a gatekeeper; it is not the highest score, but it is sufficient to exclude companies with severe financial distress.
The valuation also adds context. With a Price/Earnings ratio of 10.24—far below both the industry average of 40 and the S&P 500—the stock is priced cheaply, which can make the dividend yield even more attractive on a cost basis. The core challenge for dividend investors assessing BMY is balancing the cheap valuation and strong profitability against the high payout ratio and declining earnings trend.
To explore the full financial details behind this analysis, you can read the full fundamental analysis report for BMY.
Broader Opportunities
BMY is just one example of the stocks that can be uncovered using this disciplined screening approach. The screen applies the exact filters described above—minimum volume, price, health, profitability, and a high dividend rating—to generate a list of candidates across the market. You can run the Best Dividend Stocks screen here to see the full list of results and begin your own evaluation.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. All investment decisions should be made based on your own research and risk tolerance.
Read full article here »