NEPTUNE INSURANCE HOLDI-CL A (NYSE:NP) is an insurer that comes through a dividend screen built to balance income with business quality. The Best Dividend screen starts with the ChartMill Dividend Rating and only considers stocks with a score of at least 7. It then adds guardrails by requiring a Profitability Rating of at least 5 and a Health Rating of at least 5, together with minimum liquidity and price filters. The aim is to find companies with attractive dividend characteristics that are still supported by sound fundamentals, rather than simply chasing the highest available yield.
A Dividend Rating Supported by the Numbers
Neptune’s ChartMill Dividend Rating comes in at 7 out of 10, the minimum required by the screen. The rating combines the size of the yield, the track record of payments, and the sustainability of the dividend.
- Dividend yield: 5.68%, above the industry average of 3.96% and well above the S&P 500 average of 1.72%. The yield is higher than 89.66% of companies in the same industry.
- Dividend history: at least 10 years of dividend payments, with an annual dividend growth rate of 4.75%.
- Sustainability: earnings are growing faster than the dividend, which supports the case for future payout increases.
The screen places heavy emphasis on dividend sustainability because a high yield only helps if the company can keep funding it. A more detailed breakdown of the ratios behind this rating is available in the fundamental analysis report.
Profitability and Health: The Screen's Guardrails
The Best Dividend screen intentionally sets the profitability and health minimums at 5 rather than at top-tier levels. That leaves room for companies that are solid without being exceptional in every category.
Neptune’s profitability rating is 6, with several metrics that stand out:
- Return on Assets: 32.23%, outperforming 98.62% of industry peers.
- Return on Invested Capital: 322.50%, better than 100.00% of industry peers.
- Operating Margin: 43.65%, outperforming 97.24% of industry peers.
- Gross Margin: 69.60%, better than 97.93% of industry peers.
The health rating is more moderate at 5. There are positive signals, but also a few watch items:
- Altman-Z score: 5.93, indicating low bankruptcy risk and outperforming 96.55% of the industry.
- Debt to Free Cash Flow: 3.54, a reasonable level that implies debt could be repaid in less than four years of free cash flow.
- Current Ratio: 1.05, close to the level needed to cover short-term obligations.
- Concerns: shares outstanding have increased compared with five years ago, and the debt-to-assets ratio has worsened from last year.
For dividend investors, these metrics matter because a company needs stable cash generation and financial flexibility to keep paying shareholders. Neptune’s profitability is strong, while its health is acceptable but not flawless.
Valuation and Growth Considerations
The screen does not directly evaluate valuation, but it is still worth a look. Neptune carries a low ChartMill Valuation Rating of 2 out of 10. The trailing P/E ratio of 25.66 and forward P/E of 48.74 are both on the expensive side. At the same time, earnings per share are expected to grow by 28.33% per year and revenue by 21.56% per year over the coming years, which helps explain the premium valuation.
Revenue grew 33.74% in the past year, although the earnings history is mixed. The fundamental report notes a trailing EPS growth rate of -344.09%, followed by a much more positive forward outlook. That volatility is typical for insurance businesses, but it is a reason to keep an eye on the payout ratio and the quality of earnings behind the dividend.
Risks to Keep in Mind
A dividend screen is a starting point, not a substitute for research. Neptune’s health score is only moderate, and its valuation is stretched relative to the industry. Past net income has also been negative in some years, so the dividend track record should be viewed in the context of a volatile earnings profile. If earnings deteriorate or debt levels continue to rise, the dividend could come under pressure despite the current high score.
Putting the Screen to Work
Investors who want to apply the same methodology in their own search can use the screen and adjust the filters to match their risk preferences. The screen already incorporates the key checks around dividend quality, profitability, and financial health. More stocks matching this approach can be found through the Best Dividend Stocks screen.
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 »
View the Zacks #1 Rank List
Neptune Insurance (NYSE:NP) Balances High Dividend Yield with Solid Fundamentals
NEPTUNE INSURANCE HOLDI-CL A (NYSE:NP) is an insurer that comes through a dividend screen built to balance income with business quality. The Best Dividend screen starts with the ChartMill Dividend Rating and only considers stocks with a score of at least 7. It then adds guardrails by requiring a Profitability Rating of at least 5 and a Health Rating of at least 5, together with minimum liquidity and price filters. The aim is to find companies with attractive dividend characteristics that are still supported by sound fundamentals, rather than simply chasing the highest available yield.
A Dividend Rating Supported by the Numbers
Neptune’s ChartMill Dividend Rating comes in at 7 out of 10, the minimum required by the screen. The rating combines the size of the yield, the track record of payments, and the sustainability of the dividend.
The screen places heavy emphasis on dividend sustainability because a high yield only helps if the company can keep funding it. A more detailed breakdown of the ratios behind this rating is available in the fundamental analysis report.
Profitability and Health: The Screen's Guardrails
The Best Dividend screen intentionally sets the profitability and health minimums at 5 rather than at top-tier levels. That leaves room for companies that are solid without being exceptional in every category.
Neptune’s profitability rating is 6, with several metrics that stand out:
The health rating is more moderate at 5. There are positive signals, but also a few watch items:
For dividend investors, these metrics matter because a company needs stable cash generation and financial flexibility to keep paying shareholders. Neptune’s profitability is strong, while its health is acceptable but not flawless.
Valuation and Growth Considerations
The screen does not directly evaluate valuation, but it is still worth a look. Neptune carries a low ChartMill Valuation Rating of 2 out of 10. The trailing P/E ratio of 25.66 and forward P/E of 48.74 are both on the expensive side. At the same time, earnings per share are expected to grow by 28.33% per year and revenue by 21.56% per year over the coming years, which helps explain the premium valuation.
Revenue grew 33.74% in the past year, although the earnings history is mixed. The fundamental report notes a trailing EPS growth rate of -344.09%, followed by a much more positive forward outlook. That volatility is typical for insurance businesses, but it is a reason to keep an eye on the payout ratio and the quality of earnings behind the dividend.
Risks to Keep in Mind
A dividend screen is a starting point, not a substitute for research. Neptune’s health score is only moderate, and its valuation is stretched relative to the industry. Past net income has also been negative in some years, so the dividend track record should be viewed in the context of a volatile earnings profile. If earnings deteriorate or debt levels continue to rise, the dividend could come under pressure despite the current high score.
Putting the Screen to Work
Investors who want to apply the same methodology in their own search can use the screen and adjust the filters to match their risk preferences. The screen already incorporates the key checks around dividend quality, profitability, and financial health. More stocks matching this approach can be found through the Best Dividend Stocks screen.
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 »