One method for identifying dividend stocks worth a closer look is to start with a screener that filters for quality. The idea is to find companies that not only pay a decent dividend but also have the financial health and profitability to sustain it. Using a tool like the ChartMill Best Dividend Stocks screen, for instance, sets minimum thresholds for liquidity, a minimum price, and a solid ChartMill Dividend Rating of at least 7. Crucially, it also requires a minimum Health Rating of 5 and a Profitability Rating of 5, ensuring the dividend isn't the stock's only attractive feature. This helps avoid the trap of chasing a high yield from a company in trouble.
A strong candidate that emerges from this specific screening process is Gilead Sciences Inc (NASDAQ:GILD). The company, a major player in the biopharmaceutical industry, presents a strong case for dividend-focused investors, justified by its underlying fundamental strength.
Dividend Profile: A Solid and Sustainable Payout
The primary reason GILD is on this list is its ChartMill Dividend Rating of 7 out of 10, which signals a top-tier dividend profile. A closer look at the full fundamental report for GILD reveals why it scores so well.
- Attractive Yield: GILD currently offers a yearly dividend yield of 2.52%. While this might seem moderate in isolation, context matters. It significantly outperforms the average dividend yield of its biotechnology industry peers (a mere 0.06%) and is also above the S&P 500's average of 1.74%. This makes it a rare and valuable income source within its sector.
- Proven Reliability: A key component of a good dividend rating is history. GILD has not only paid a dividend for at least 10 years but has also never decreased its dividend over that same period. This consistent track record is a strong signal of management's commitment to returning capital to shareholders.
- Sustainable Structure: The safety of a dividend is critical. GILD's payout ratio sits at 43.76% of its net income. This is a very manageable level, indicating the company retains enough earnings to reinvest in its business and weather potential downturns. Critically, the analysis confirms that GILD's earnings are growing at a faster rate than its dividend, which means the dividend growth is sustainable and has room to continue.
The Foundation: Top-Tier Profitability and Health
A high dividend rating is built on a foundation of a healthy and profitable business, and GILD performs well in both areas.
- Profitability Rating of 9/10: This is an exceptional score. GILD's profitability metrics are among the best in its industry. Its Return on Equity (ROE) of 39.19% and Return on Invested Capital (ROIC) of 19.94% both outperform over 96% of its competitors. These figures demonstrate that GILD is exceptionally efficient at generating profit from its capital base, which is the ultimate source of its dividend.
- Health Rating of 8/10: The company is financially sound. Its Altman-Z score of 4.75 indicates a very low risk of bankruptcy. Furthermore, its debt to free cash flow ratio of just 2.17 means the company could theoretically pay off all its debt in just over two years using its cash flow. This strong solvency provides a significant margin of safety for the dividend.
Connecting the Dots: Why This Matters for the Strategy
The "Best Dividend" strategy is not about finding the highest yield at any cost. It’s about finding a sustainable income stream backed by a strong business. For dividend investors, a cut or suspension of the dividend is the worst-case scenario, often wiping out years of income in a single day of share price decline.
GILD's appeal lies in its balance. It offers a yield that is substantially higher than its industry peers and the broader market, yet it is supported by near-best-in-class profitability and a strong financial health profile. The high profitability provides the cash flow to pay the dividend today, while the strong health ensures it can continue to pay through various economic cycles. The moderate payout ratio and growing earnings also suggest potential for future dividend increases.
This combination makes GILD a textbook example of what the screening strategy aims to find: a stock where investors don't have to sacrifice quality for yield.
Explore More Candidates
This is just one result from a broader screening approach designed to uncover high-quality dividend payers. For a more complete list of stocks that meet these strict criteria, you can access and customize the full set of results by running the Best Dividend Stocks screen yourself to find more opportunities aligned with your investment goals.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Investing in stocks involves risk, and past performance is not indicative of future results. Always conduct your own research before making any investment decisions.
Read full article here »
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Gilead Sciences Inc (NASDAQ:GILD): A Quality Dividend Stock for Income Investors
One method for identifying dividend stocks worth a closer look is to start with a screener that filters for quality. The idea is to find companies that not only pay a decent dividend but also have the financial health and profitability to sustain it. Using a tool like the ChartMill Best Dividend Stocks screen, for instance, sets minimum thresholds for liquidity, a minimum price, and a solid ChartMill Dividend Rating of at least 7. Crucially, it also requires a minimum Health Rating of 5 and a Profitability Rating of 5, ensuring the dividend isn't the stock's only attractive feature. This helps avoid the trap of chasing a high yield from a company in trouble.
A strong candidate that emerges from this specific screening process is Gilead Sciences Inc (NASDAQ:GILD). The company, a major player in the biopharmaceutical industry, presents a strong case for dividend-focused investors, justified by its underlying fundamental strength.
Dividend Profile: A Solid and Sustainable Payout
The primary reason GILD is on this list is its ChartMill Dividend Rating of 7 out of 10, which signals a top-tier dividend profile. A closer look at the full fundamental report for GILD reveals why it scores so well.
The Foundation: Top-Tier Profitability and Health
A high dividend rating is built on a foundation of a healthy and profitable business, and GILD performs well in both areas.
Connecting the Dots: Why This Matters for the Strategy
The "Best Dividend" strategy is not about finding the highest yield at any cost. It’s about finding a sustainable income stream backed by a strong business. For dividend investors, a cut or suspension of the dividend is the worst-case scenario, often wiping out years of income in a single day of share price decline.
GILD's appeal lies in its balance. It offers a yield that is substantially higher than its industry peers and the broader market, yet it is supported by near-best-in-class profitability and a strong financial health profile. The high profitability provides the cash flow to pay the dividend today, while the strong health ensures it can continue to pay through various economic cycles. The moderate payout ratio and growing earnings also suggest potential for future dividend increases.
This combination makes GILD a textbook example of what the screening strategy aims to find: a stock where investors don't have to sacrifice quality for yield.
Explore More Candidates
This is just one result from a broader screening approach designed to uncover high-quality dividend payers. For a more complete list of stocks that meet these strict criteria, you can access and customize the full set of results by running the Best Dividend Stocks screen yourself to find more opportunities aligned with your investment goals.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Investing in stocks involves risk, and past performance is not indicative of future results. Always conduct your own research before making any investment decisions.
Read full article here »