Last update on 2024-06-28

Ageas SA/ (0Q99.IL) - Dividend Analysis (Final Score: 4/8)

Comprehensive analysis of Ageas SA/ (0Q99.IL) dividend stability and performance, using an 8-criteria scoring system. Final Score: 4/8. Learn more.

Short Analysis - Dividend Score: 4

We're running Ageas SA/ (0Q99.IL) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis for Ageas SA/ (0Q99.IL) covers 8 key criteria to evaluate the performance and stability of its dividend policy. The company has a strong dividend yield, consistently higher than the industry average. While the average annual dividend growth rate over the last 20 years is high, Ageas SA/ has an average payout ratio over 65%, suggesting sustainability issues. The coverage of dividends by earnings and cash flow also shows inconsistency, raising concerns over the company's ability to maintain dividend payments during tough economic times. Despite fluctuations, Ageas SA/ has managed stable dividend payments since 2010, without drops exceeding 20%, though it lacks a 25-year history of payments. The analysis also indicates reliable stock repurchases over the past 20 years, highlighting some level of commitment to returning value to shareholders.

Insights for Value Investors Seeking Stable Income

While Ageas SA/ offers an attractive dividend yield and has demonstrated some level of dividend stability and reliable stock repurchases, the inconsistency in payout ratios, dividend coverage by earnings and cash flow, and the lack of a prolonged history of dividend payments pose risks for income-focused investors. Potential investors should approach with caution, considering the sustainability concerns and the financial health of the company that may affect future dividend payouts.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. It is crucial for investors seeking regular income.

Ageas SA/ (0Q99.IL) has a dividend yield of 7.6278%, which is significantly higher than the industry average of 3.85%. Historically, Ageas has exhibited fluctuating yields, with notable peaks in 2013 (7.1128%), 2014 (8.277%), and 2017 (8.7931%). Over the last two decades, Ageas consistently exceeded the industry average, particularly in 2022 (10.2881%). However, periods of zero dividends, observed in years like 2010 (0.8092%) and 2020 (6.0461%), should be considered. A higher dividend yield could attract income-focused investors but may also indicate potential issues with stock price depreciation or high payout ratios. Overall, the consistently higher-than-average yield trend is favourable but warrants scrutiny for sustainability.

Average annual Growth Rate higher than 5% in the last 20 years?

Explain the criterion for Ageas SA/ (0Q99.IL) and why it is important to consider

The Dividend Growth Rate measures the annualized percentage growth rate of a company’s dividend over time. A high and consistent dividend growth rate can indicate financial health and a commitment to returning value to shareholders. It is a crucial metric for income-focused investors looking for reliable and growing income streams.

Average annual Payout Ratio lower than 65% in the last 20 years?

A company's average payout ratio, preferably below 65%, ensures dividend sustainability by not distributing a significant portion of earnings, retaining profits for growth, and mitigating the financial strain during adverse periods.

Based on the provided payout ratio data, Ageas SA/ (0Q99.IL) has an average payout ratio of approximately 94.2% over the last 20 years, which significantly exceeds the benchmark of 65%. Most years, especially 2014 (1272.2%) and 2017 (115.7%), show exceedingly high payout ratios. This is a negative trend, indicating potential challenges in sustaining dividend payments given that a high proportion of earnings are being distributed as dividends, leaving limited room for growth or reinvestment.

Dividends Well Covered by Earnings?

Examining whether dividends are covered by earnings is crucial as it indicates a company's capability to maintain and potentially increase dividend payouts without jeopardizing its financial stability.

The data over the years shows variability in how well Ageas SA/NV's dividends have been covered by earnings. In 2023, the earnings per share (EPS) is 5.1886 while the dividend per share (DPS) is 3, resulting in a coverage ratio of approximately 0.578, which is below the ideal ratio of 1. This suggests that the company might be stretching to pay its dividends. Historically, we observe significant fluctuations. For instance, in 2008, the company had a negative EPS of -122.014 against a DPS of 5.9, indicating financial stress. Positive changes are seen post-2009, but with continued variability. An exceptional number is observed in 2016, where the EPS to DPS ratio was an outstanding 12.72, although this anomaly might indicate unique corporate actions. Generally, a pattern of inconsistent coverage is seen, with most years showing inadequate coverage. This inconsistency is a cause for concern as it could indicate potential dividend cuts or financial adjustments in economically challenging periods.

Dividends Well Covered by Cash Flow?

This criterion evaluates whether the dividends paid by the company are well-covered by the free cash flow, ensuring sustainability.

Looking at Ageas SA’s free cash flow and dividend payout amounts over the years, we notice significant fluctuations. For example, 2008 saw a negative free cash flow of -€3.481B while having a relatively modest dividend payout of €1.378B. Conversely, 2009 experienced a jump in free cash flow to €9.464B with an extremely modest dividend payout of €7M. Subsequently, periods like 2021 show healthier coverage with a free cash flow of €859M against a €765M dividend, equating to a coverage ratio of 0.890, indicating more sustainable dividends. However, 2023’s numbers reveal concerns with a negative free cash flow of -€115M against a dividend payout of €540M, yielding a coverage ratio of -4.696. This suggests a poor trend where dividends are not backed by free cash flow, posing risks. Overall, while there have been years of positive coverage, the recurrent negative free cash flows (especially in 2013, 2017, and 2023) and the corresponding low or negative coverage ratios highlight a problematic trend concerning the sustainability of dividend payments.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

In reviewing the dividend history of Ageas SA/ (0Q99.IL) over the past 20 years, we can observe certain fluctuations. While there have been intermittent periods where dividends were not paid out (e.g., 2003-2007, 2009) which might be attributed to financial restructuring or market conditions, a trend towards stability starts becoming evident post-2010. For instance, starting from EUR 0.14 per share in 2010, there is discernible growth in dividend payouts, peaking at EUR 4.4 in 2019. However, in certain years, such as 2020, there was a retrenchment to EUR 2.65 (a drop from 2019), which again rose to EUR 4.25 in 2021. Despite these fluctuations, there isn't a single year where the dividend drop exceeded 20%, meeting the criterion of dividend stability and making Ageas SA/ an appealing option for income-seeking investors. However, potential investors need to be cognizant of the periods where dividends were not paid, as those can signal financial distress or corporate restructuring. Still, the overall pattern suggests resilience and growth in dividends post-2010.

Dividends Paid for Over 25 Years?

Criterion 6 examines whether Ageas SA/ has paid dividends consistently for over 25 years, helping assess long-term investor confidence.

Upon analyzing the dividends paid by Ageas SA/ (0Q99.IL) from 2003 to 2023, it is evident that consistent dividend payments are lacking. The company only began distributing dividends in 2008 and has inconsistent payouts over the years. Although recent years show more regularity and higher dividends per share, falling short of the 25-year mark is a negative indicator regarding long-standing reliability.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Ageas SA/ (0Q99.IL) and why it is important to consider

Number of Share last 20 years: {'year': {'values': ['2003', '2004', '2005', '2006', '2007', '2008', '2009', '2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023']}, 'numberOfShares': {'values': [155072987, 158245748, 158245748, 159303192, 201191958, 229662195, 247545730, 248237723, 254673168, 237667000, 229255000, 223627000, 216132000, 208931000, 201991000, 196931000, 192525000, 187938000, 186765000, 184162000, 183671000]}}, Reliable repurchased years last 20 years: ['2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023'] Average repurchased last 20 years: 1.0866