Last update on 2024-06-28

Laboratorios Farmaceuticos Rovi (41L.F) - Dividend Analysis (Final Score: 6/8)

Get an in-depth dividend analysis of Laboratorios Farmaceuticos Rovi (41L.F). Learn about its performance, stability, and historical trends to make informed investment decisions.

Short Analysis - Dividend Score: 6

We're running Laboratorios Farmaceuticos Rovi (41L.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Laboratorios Farmaceuticos Rovi (41L.F) has been evaluated based on an 8-criteria scoring system for its dividend policy, earning a score of 6. The company has a relatively high dividend yield of 2.1385% compared to the industry average of 0.08%. However, its dividend growth rate has been volatile, fluctuating significantly over the years. The average payout ratio stands at a conservative 17.09%, indicating prudent earnings retention for growth. Dividends are currently well-covered by both earnings and cash flow, although the company had struggles in previous years. It has been consistently paying dividends for 13 years but hasn't met the 25-year mark, which would indicate long-term stability. Stock repurchases have been irregular, reflecting inconsistent cash flow or varying strategic focus.

Insights for Value Investors Seeking Stable Income

Laboratorios Farmaceuticos Rovi (41L.F) appears to be a stable, albeit slightly volatile, dividend-paying stock. If you are an income-focused investor, the company's high dividend yield and conservative payout ratio may be attractive aspects. However, the inconsistency in dividend growth and stock repurchases could be concerning. If stability and long-term reliability are your top priorities, you may want to consider other options or conduct further research into the factors causing these fluctuations. Overall, it could be worth looking into, but proceed with caution and a deeper analysis.

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 measures how much a company pays out in dividends each year relative to its stock price. It is a good indicator of the return on investment for shareholders from dividends alone and is critical for income-focused investors.

Laboratorios Farmaceuticos Rovi's dividend yield of 2.1385% is significantly higher than the industry average of 0.08%. Historically, the company's dividend yield has shown considerable variation, peaking at 5.2592% in 2022 and dropping as low as 0.3325% in 2019. Despite this fluctuation, the current yield indicates a return well above the industry norm, making it enticing for dividend investors. Although higher dividends can be attractive, investors should be cautious of the underlying reasons for these fluctuations. The stock price has seen substantial growth, jumping from €4.997 in 2011 to €60.5 in 2023, which could explain the corresponding rise in dividend per share values.

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

The Dividend Growth Rate is a key metric for assessing the sustainability and potential growth of dividend payments by a company over time. A rate higher than 5% is considered robust.

The Dividend Ratio for Laboratorios Farmaceuticos Rovi presents a volatile picture over the last 12 years which makes long-term growth assessment challenging. While the Average Dividend Growth Ratio is high at 42.8%, individual yearly values have fluctuated drastically from a minimum of -34.0437% in 2018 to as high as 401.3641% in 2022. This volatility suggests that Rovi's dividend policy has experienced irregular inputs and cannot be termed as sustainably growing. While a single year of high growth can be seen as a positive, consistent long-term growth is necessary to meet the criterion. Environmental factors such as market performance, internal company decisions, or specific corporate strategies likely account for these variations, suggesting caution in relying solely on recent high averages for future expectations.

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

Average Payout Ratio lower than 65% evaluates whether a company retains enough earnings to fund its operations and growth while still paying dividends.

The average payout ratio for Laboratorios Farmaceuticos Rovi over the last 13 years is approximately 17.09%, which is substantially lower than the threshold of 65%. This indicates the company has been conservative in its payout policy, retaining a significant portion of its earnings for reinvestment or other corporate purposes. In the years from 2017 to 2023, the payout ratios have fluctuated but remained well within this threshold. A lower payout ratio can be beneficial as it suggests the company has enough flexibility to maintain dividend payments even during downturns. The trends show a good balance between rewarding shareholders and retaining earnings for growth, which is favorable for the company's financial health and sustainability in the long run.

Dividends Well Covered by Earnings?

Explain the criterion for Laboratorios Farmaceuticos Rovi (41L.F) and why it is important to consider

Earnings per Share (EPS) is a critical measure of a company's profitability. For dividend sustainability, it is fundamental to ensure that earnings adequately cover the amounts distributed as dividends. A well-covered dividend provides reassurance to investors regarding payout stability and room for potential growth.

Dividends Well Covered by Cash Flow?

Dividends covered by cash flow is crucial as it indicates whether a company’s earnings are sufficient to cover its dividend payouts. This measure assesses a company's financial health and sustainability of dividends.

In the case of Laboratorios Farmaceuticos Rovi (41L.F), from 2017 to 2023, the trend shows an improving capacity to cover dividends with cash flow. In 2017, the coverage was negative at -4.74, suggesting an inability to cover dividends from operational cash flows. However, there has been a positive trajectory, and since 2020, the company has consistently shown the ability to cover its dividends with cash flow, reaching a ratio of 1.19 in 2023. This trend is favorable and indicates improving financial health leading to sustainable dividend payouts.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends imply consistent earnings and sound financial management, ensuring reliable income for investors. A drop beyond 20% can signal risk.

Laboratorios Farmaceuticos Rovi (41L.F) has generally shown stable dividends over the past 13 years, considering the available data from 2011 to 2023. The year-over-year dividend per share appears reasonably consistent with few fluctuations. However, there are notable years like 2013 to 2012, and 2018 to 2019 when dividends dropped significantly. Particularly in 2019 the dividend per share was only 0.0798, representing more than a 20% drop from 2018's 0.1207. Despite this, recent years show a surge, peaking at 1.9112 in 2021. Such volatility indicates underlying financial challenges or policy shifts. Therefore, ROVI's dividend policy is somewhat stable but marred by occasional substantial drops, albeit trending positively in recent times.

Dividends Paid for Over 25 Years?

Explain the criterion for Laboratorios Farmaceuticos Rovi (41L.F) and why it is important to consider

Dividends paid continuously for over 25 years demonstrate a company’s ability to generate steady earnings and commitment to returning value to shareholders. This consistency reassures investors of financial stability. Laboratorios Farmaceuticos Rovi (41L.F.) has been paying dividends for 13 consecutive years, as evident from the data provided for 2011 to 2023. Despite not meeting the 25-year threshold, the consistency over these recent 13 years showcases the company’s balanced approach to operational stability and shareholder value. This track record is good because it indicates a mature and financially sound position, although it falls short of the ideal 25-year mark. The slight reduction in dividends during some years is a minor blemish but doesn't overshadow the overall positive trend.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchase activities over the past two decades indicate the company's financial stability and a commitment to returning value to shareholders. Regular buybacks often suggest strong cash flow and efficient capital allocation.

Observing Laboratorios Farmaceuticos Rovi (41L.F) over the past 20 years, it's evident that there’s been a sporadic approach to stock repurchasing. Specifically, they conducted stock buybacks in 2013, 2019, 2022, and 2023, exhibiting intervals of several years without repurchases. The average repurchase rate stands at -7.639%. This trend reveals a pattern of inconsistent buybacks, which could imply variability in the company’s cash flow or strategic priorities. Such irregularity could be concerning for investors seeking consistent returns from buyback programs, reflecting either opportunistic repurchases or fiscal unpredictability, a situation requiring close monitoring.