Why NYSE:CMI provides a good dividend, while having solid fundamentals.

Last update: Feb 1, 2024

Take a closer look at CUMMINS INC (NYSE:CMI), a stock of interest to dividend investors uncovered by our stock screener. NYSE:CMI excels in fundamentals and provides a decent dividend, all while maintaining a reasonable valuation. Let's break it down further.

Dividend Assessment of NYSE:CMI

ChartMill employs its own Dividend Rating system for all stocks. This score, on a scale of 0 to 10, is determined by evaluating different dividend factors, such as yield, historical performance, dividend growth, and sustainability. NYSE:CMI has been assigned a 7 for dividend:

CMI's Dividend Yield is rather good when compared to the industry average which is at 1.72. CMI pays more dividend than 93.13% of the companies in the same industry.
On average, the dividend of CMI grows each year by 7.48%, which is quite nice.
CMI has paid a dividend for at least 10 years, which is a reliable track record.
CMI has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
CMI pays out 32.36% of its income as dividend. This is a sustainable payout ratio.

Understanding NYSE:CMI's Health Score

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:CMI has earned a 5 out of 10:

An Altman-Z score of 3.36 indicates that CMI is not in any danger for bankruptcy at the moment.
CMI has a Altman-Z score of 3.36. This is in the better half of the industry: CMI outperforms 61.83% of its industry peers.
CMI has a debt to FCF ratio of 3.38. This is a good value and a sign of high solvency as CMI would need 3.38 years to pay back of all of its debts.
CMI has a better Debt to FCF ratio (3.38) than 67.94% of its industry peers.

Profitability Examination for NYSE:CMI

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:CMI was assigned a score of 7 for profitability:

CMI has a better Return On Assets (8.71%) than 74.05% of its industry peers.
Looking at the Return On Equity, with a value of 26.24%, CMI belongs to the top of the industry, outperforming 87.02% of the companies in the same industry.
CMI has a better Return On Invested Capital (11.30%) than 73.28% of its industry peers.
The last Return On Invested Capital (11.30%) for CMI is above the 3 year average (9.47%), which is a sign of increasing profitability.
CMI has a Profit Margin of 8.40%. This is in the better half of the industry: CMI outperforms 66.41% of its industry peers.
CMI's Profit Margin has improved in the last couple of years.

More Best Dividend stocks can be found in our Best Dividend screener.

For an up to date full fundamental analysis you can check the fundamental report of CMI

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.