For dividend investors, the challenge is often not finding stocks that pay a yield, but finding companies that can sustain and grow that payout without taking on too much financial strain. A systematic approach such as the Best Dividend screen addresses this by combining a minimum ChartMill Dividend Rating of 7 with profitability and health ratings of at least 5. This combination is designed to filter for companies that offer a genuine income component while still showing the financial quality needed to support it. AMDOCS LTD (NASDAQ:DOX) is one of the stocks that comes through this filter with a profile worth a closer look for income-focused investors.
Why these criteria matter for dividend investors
The Best Dividend screen is built around the idea that a high yield alone is not enough. Some of the most common pitfalls in dividend investing include:
- A lofty dividend yield that is mainly the result of a falling share price, which can signal trouble ahead.
- A payout ratio that is too high, leaving little room for reinvestment or an economic downturn.
- A weak balance sheet, which can force a company to cut or suspend its dividend during stress.
The screen therefore applies minimum thresholds across three dimensions: the ChartMill Dividend Rating, the Profitability Rating, and the Health Rating. In this case, DOX clears all three hurdles with a Dividend Rating of 7, a Profitability Rating of 8, and a Health Rating of 6.
A closer look at the dividend
The dividend profile is the main reason DOX appears in this screen. The company offers a yearly dividend yield of 3.88%, which is well above the industry average of 1.31% and the S&P 500 average of 1.72%. In fact, DOX pays a better dividend than 92.22% of its industry peers.
Beyond the yield, there is a track record to consider:
- Dividend growth: 10.47% annualized over the past five years
- Dividend history: paid for at least 10 years without a decrease
- Payout ratio: 43.06% of income, which is moderate but not excessive
These factors support the Dividend Rating of 7. However, the fundamental report also notes that earnings are growing slower than the dividend, which means the current dividend growth rate may not be sustainable over the long term. That is a point worth monitoring.
Profitability and health provide the foundation
DOX also brings solid profitability, which is essential when assessing the durability of a dividend. The Profitability Rating is 8 out of 10, supported by a return on invested capital of 14.12%, a profit margin of 11.58%, and an operating margin of 17.74%. The company has been profitable in each of the past five years and generated positive operating cash flow over that period.
On the health side, the rating is 6, which is still above the screen's minimum threshold. The company has a strong solvency profile, with an Altman-Z score of 4.06 and a debt to free cash flow ratio of 1.32. The main area of caution is liquidity: the current ratio and quick ratio both sit at 0.98, which could signal some difficulty covering short-term obligations. That is somewhat offset by the company's profitability and solid solvency, but it remains a factor for dividend investors to evaluate.
Investors who want to review the full breakdown can access the complete fundamental analysis report for DOX.
Cash flow screen adds support
DOX also appears on the High Free Cash Flow Stocks screen, which targets companies with strong free cash flow generation combined with quality and liquidity filters. The screen notes that companies with strong free cash flow are often more flexible, more resilient, and better positioned to return capital to shareholders. Since DOX generates strong free cash flow relative to its market price, this adds useful confirmation that the dividend is backed by actual cash generation.
Finding more stocks with this profile
The methodology behind this screen is repeatable. Investors looking for other companies with a high dividend rating, combined with adequate profitability and financial health, can browse the Best Dividend screen to explore the full list.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »
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Dividend Quality Spotlight: Amdocs (NASDAQ:DOX) Clears the Best Dividend Screen
For dividend investors, the challenge is often not finding stocks that pay a yield, but finding companies that can sustain and grow that payout without taking on too much financial strain. A systematic approach such as the Best Dividend screen addresses this by combining a minimum ChartMill Dividend Rating of 7 with profitability and health ratings of at least 5. This combination is designed to filter for companies that offer a genuine income component while still showing the financial quality needed to support it. AMDOCS LTD (NASDAQ:DOX) is one of the stocks that comes through this filter with a profile worth a closer look for income-focused investors.
Why these criteria matter for dividend investors
The Best Dividend screen is built around the idea that a high yield alone is not enough. Some of the most common pitfalls in dividend investing include:
The screen therefore applies minimum thresholds across three dimensions: the ChartMill Dividend Rating, the Profitability Rating, and the Health Rating. In this case, DOX clears all three hurdles with a Dividend Rating of 7, a Profitability Rating of 8, and a Health Rating of 6.
A closer look at the dividend
The dividend profile is the main reason DOX appears in this screen. The company offers a yearly dividend yield of 3.88%, which is well above the industry average of 1.31% and the S&P 500 average of 1.72%. In fact, DOX pays a better dividend than 92.22% of its industry peers.
Beyond the yield, there is a track record to consider:
These factors support the Dividend Rating of 7. However, the fundamental report also notes that earnings are growing slower than the dividend, which means the current dividend growth rate may not be sustainable over the long term. That is a point worth monitoring.
Profitability and health provide the foundation
DOX also brings solid profitability, which is essential when assessing the durability of a dividend. The Profitability Rating is 8 out of 10, supported by a return on invested capital of 14.12%, a profit margin of 11.58%, and an operating margin of 17.74%. The company has been profitable in each of the past five years and generated positive operating cash flow over that period.
On the health side, the rating is 6, which is still above the screen's minimum threshold. The company has a strong solvency profile, with an Altman-Z score of 4.06 and a debt to free cash flow ratio of 1.32. The main area of caution is liquidity: the current ratio and quick ratio both sit at 0.98, which could signal some difficulty covering short-term obligations. That is somewhat offset by the company's profitability and solid solvency, but it remains a factor for dividend investors to evaluate.
Investors who want to review the full breakdown can access the complete fundamental analysis report for DOX.
Cash flow screen adds support
DOX also appears on the High Free Cash Flow Stocks screen, which targets companies with strong free cash flow generation combined with quality and liquidity filters. The screen notes that companies with strong free cash flow are often more flexible, more resilient, and better positioned to return capital to shareholders. Since DOX generates strong free cash flow relative to its market price, this adds useful confirmation that the dividend is backed by actual cash generation.
Finding more stocks with this profile
The methodology behind this screen is repeatable. Investors looking for other companies with a high dividend rating, combined with adequate profitability and financial health, can browse the Best Dividend screen to explore the full list.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »