Is NASDAQ:NTAP suited for dividend investing?

NETAPP INC (NASDAQ:NTAP) has caught the attention of dividend investors as a stock worth considering. NASDAQ:NTAP excels in profitability, solvency, and liquidity, all while providing a decent dividend. Let's delve into the details.

Understanding NASDAQ:NTAP's Dividend Score

ChartMill assigns a Dividend Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing various dividend elements, such as yield, historical performance, dividend growth, and sustainability. NASDAQ:NTAP has been awarded a 7 for its dividend quality:

• Compared to an average industry Dividend Yield of 2.97, NTAP pays a better dividend. On top of this NTAP pays more dividend than 81.25% of the companies listed in the same industry.
• NTAP has paid a dividend for at least 10 years, which is a reliable track record.
• NTAP has not decreased their dividend for at least 10 years, which is a reliable track record.
• NTAP pays out 36.49% of its income as dividend. This is a sustainable payout ratio.
• The dividend of NTAP is growing, but earnings are growing more, so the dividend growth is sustainable.

Health Analysis for NASDAQ:NTAP

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:NTAP, the assigned 5 for health provides valuable insights:

• NTAP's Altman-Z score of 2.93 is fine compared to the rest of the industry. NTAP outperforms 71.88% of its industry peers.
• The Debt to FCF ratio of NTAP is 1.45, which is an excellent value as it means it would take NTAP, only 1.45 years of fcf income to pay off all of its debts.
• With an excellent Debt to FCF ratio value of 1.45, NTAP belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
• Although NTAP does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

Profitability Assessment of NASDAQ:NTAP

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:NTAP, the assigned 8 is noteworthy for profitability:

• With an excellent Return On Assets value of 12.78%, NTAP belongs to the best of the industry, outperforming 90.63% of the companies in the same industry.
• NTAP has a Return On Equity of 129.04%. This is amongst the best in the industry. NTAP outperforms 96.88% of its industry peers.
• NTAP has a Return On Invested Capital of 23.44%. This is amongst the best in the industry. NTAP outperforms 84.38% of its industry peers.
• The last Return On Invested Capital (23.44%) for NTAP is above the 3 year average (15.62%), which is a sign of increasing profitability.
• NTAP has a Profit Margin of 17.78%. This is amongst the best in the industry. NTAP outperforms 96.88% of its industry peers.
• With an excellent Operating Margin value of 21.74%, NTAP belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
• Looking at the Gross Margin, with a value of 71.10%, NTAP belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
• NTAP's Gross Margin has improved in the last couple of years.

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

Check the latest full fundamental report of NTAP for a complete fundamental analysis.

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.