Companies in the commercial and professional services sector operate in areas ranging from commercial printing to consulting services. Most of these names such as McGrath RentCorp and HNI suffer from high cyclicality. As such, the position a company has relative to the economic cycle drives its level of profitability. Cash flow availability also drives dividend payout, so in times of growth, these service companies could provide hefty dividend income for your portfolio. As a long term investor, I favour these services stocks with great dividend payments that continues to add value to my portfolio.
McGrath RentCorp (NASDAQ:MGRC)
MGRC has a nice dividend yield of 2.54% and the company has a payout ratio of 16.22% , with the expected payout in three years being 47.94%. MGRC’s DPS have risen to US$1.36 from US$0.80 over a 10 year period. They have been dependable too, not missing a single payment in this time. McGrath RentCorp’s earnings growth over the past 12 months has exceeded the us commercial services industry, with the company reporting an EPS growth of 302.40% while the industry totaled 9.60%. More on McGrath RentCorp here.
HNI Corporation (NYSE:HNI)
HNI has a decent dividend yield of 3.21% and is distributing 55.17% of earnings as dividends . In the case of HNI, they have increased their dividend per share from US$0.86 to US$1.14 so in the past 10 years. During this period, the company has not missed a dividend payment – as you would expect from a company increasing their dividend. The company’s future earnings growth looks promising, with analysts expecting earnings growth over the next three years to reach 58.65%. More detail on HNI here.
Brinker International, Inc. (NYSE:EAT)
EAT has a sumptuous dividend yield of 4.21% and is distributing 54.09% of earnings as dividends . Over the past 10 years, EAT has increased its dividends from US$0.44 to US$1.52. They have been consistent too, not missing a payment during this 10 year period. Over the next three years, analysts predict double digit earnings growth for Brinker International of 56.27%. Interested in Brinker International? Find out more here.
For more solid dividend paying companies to add to your portfolio, explore this interactive list of top dividend payers.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.