When it comes to margins, services often provide the biggest bang for a corporation’s buck. After all, the manufacturing of products costs money and comes with a variety of inputs. Services, on the other hand, come down to labor, brain power and technology. Because of this, services businesses can often reap larger cash flows than their manufacturing sisters.
And our Best Dividend Stocks List pick in the services sector is a prime example of this.
As one of the largest consultants in the world, our pick has been able to prosper during the pandemic. As businesses look to save money, navigate the new environment and stay afloat, our pick has seen a huge uptick in its services. Revenues clocked in at more than $10 billion last quarter alone and new bookings increased by 6%. This continued strength has allowed our pick to raise its payout on a consistent basis. Switching from a semi-annual payout to a quarterly one has translated into an increase of 10% in its equivalent quarterly payout.
But more growth could be in store.
Our pick has continued to focus on data solutions and tech implementation. Offering even higher margins than some of its regular consulting services, these offerings in cloud and virtual infrastructure have the potential to boost cash flows further. Already, these solutions are a main driver of its revenues. But with tech, mobile commerce and cloud computing growing across the business world, our pick has the potential to increase its profit.
In the end, the power of advice continues to be a huge win for portfolios and income seekers.
To summarize, here are five reasons why you should own this stock:
- One of the largest consultants pulling in more than $40 billion in sales last year.
- Benefits from a recession-proof business model based on providing consulting service during both good and bad economic environments.
- Increased its dividend for 10 years straight and its shift to a quarterly payout was equivalent to a 10% increase in dividend.
- Moves into big data, A.I. and cloud computing have continued to boost margins even further.
- Healthy payout ratio of 42% and growing yield of 1%.
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