Maximus, Inc.'s (NYSE:MMS) investors are due to receive a payment of $0.30 per share on 31st of August. This means the dividend yield will be fairly typical at 1.7%.

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Maximus' Payment Could Potentially Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Maximus' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 8.6% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.

See our latest analysis for Maximus

Maximus Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.18 in 2015 to the most recent total annual payment of $1.20. This means that it has been growing its distributions at 21% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Maximus has been growing its earnings per share at 10% a year over the past five years. Maximus definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Maximus Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Maximus might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Maximus that investors should know about before committing capital to this stock. Is Maximus not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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