Is WILLIAMS-SONOMA INC (NYSE:WSM) a Good Fit for Dividend Investing?

Our stock screener has spotted WILLIAMS-SONOMA INC (NYSE:WSM) as a good dividend stock with solid fundamentals. WSM shows decent health and profitability. At the same time it gives a good and sustainable dividend. We'll dive into each aspect below.

Looking at the Dividend

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. WSM has been awarded a 7 for its dividend quality:

• Compared to an average industry Dividend Yield of 5.05, WSM pays a bit more dividend than its industry peers.
• On average, the dividend of WSM grows each year by 6.72%, which is quite nice.
• WSM has been paying a dividend for at least 10 years, so it has a reliable track record.
• WSM has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
• WSM pays out 24.36% of its income as dividend. This is a sustainable payout ratio.
• WSM's earnings are growing more than its dividend. This makes the dividend growth sustainable.

Understanding WSM's Health Score

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. WSM has received a 8 out of 10:

• WSM has an Altman-Z score of 6.96. This indicates that WSM is financially healthy and has little risk of bankruptcy at the moment.
• WSM has a better Altman-Z score (6.96) than 96.69% of its industry peers.
• There is no outstanding debt for WSM. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• WSM does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Assessing Profitability for WSM

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For WSM, the assigned 9 is a significant indicator of profitability:

• With an excellent Return On Assets value of 22.04%, WSM belongs to the best of the industry, outperforming 98.35% of the companies in the same industry.
• With an excellent Return On Equity value of 57.42%, WSM belongs to the best of the industry, outperforming 95.04% of the companies in the same industry.
• The Return On Invested Capital of WSM (33.38%) is better than 95.87% of its industry peers.
• WSM had an Average Return On Invested Capital over the past 3 years of 34.32%. This is significantly above the industry average of 14.51%.
• With an excellent Profit Margin value of 14.54%, WSM belongs to the best of the industry, outperforming 96.69% of the companies in the same industry.
• In the last couple of years the Profit Margin of WSM has grown nicely.
• Looking at the Operating Margin, with a value of 18.50%, WSM belongs to the top of the industry, outperforming 94.21% of the companies in the same industry.
• In the last couple of years the Operating Margin of WSM has grown nicely.
• The Gross Margin of WSM (46.75%) is better than 71.90% of its industry peers.
• WSM's Gross Margin has improved in the last couple of years.

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

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.