Last update on 2024-06-27

Amadeus Fire (AAD.DE) - Dividend Analysis (Final Score: 5/8)

In-depth analysis of Amadeus Fire (AAD.DE) dividend policy scoring 5 out of 8. Insights on performance, stability, and sustainability for informed investment decisions.

Short Analysis - Dividend Score: 5

We're running Amadeus Fire (AAD.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Amadeus Fire (AAD.DE) was evaluated on an 8-criteria system to determine the stability and performance of its dividend policy. It scored a 5 out of 8. Several positive aspects were observed: a higher-than-industry-average dividend yield at 3.6585%, an impressive average growth rate of 25.43% despite high variability, a conservative average payout ratio of 32.34%, and fairly regular dividends paid since 2001 with interruptions. However, there are areas of concern, such as irregular dividend growth rates, fluctuating dividend cover ratios by earnings and cash flows, occasional lack of dividend payments (especially in 2004 and 2020), and minimal stock repurchases. Thus, while Amadeus Fire demonstrates some strong attributes, inconsistencies reveal potential risks for dividend reliability.

Insights for Value Investors Seeking Stable Income

Considering the positives and negatives, Amadeus Fire (AAD.DE) offers a mixed dividend profile. The strong dividend yield and low payout ratio are attractive, but the erratic growth rate, occasional payment gaps, and fluctuating coverage by earnings and cash flow should be cautionary signs. As an investor, if you're looking for stable and reliable dividends, you might want to approach this stock cautiously. It might be better suited for those who can tolerate a bit of risk and variability.

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 for Amadeus Fire (AAD.DE)

Amadeus Fire's current dividend yield of 3.6585% stands favorably higher than the industry average at 2.6%, signaling the company's robust dividend distribution compared to peers. However, the 20-year yield history highlights significant variability, peaking at 14.8538% in 2008, which likely resulted from dramatic share price drops during the financial crisis when the stock closed at €8.55. The subsequent yields reflect fluctuations influenced by varying dynamics. Although peaking yields are often reacted by crisis, the steady trends from 2013 until 2019 (ranging around 4-5%, closing stock prices depicting growth) denote consistency and growth in shareholder returns. Comparatively, Amadeus Fire outperforms industry average implying stronger short-term attractiveness for dividend-focused investors.

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

The Dividend Growth Rate tells us how much the dividend payments have increased over a specified period, which is crucial for evaluating the company's maturity and attractiveness to investors.

Analyzing the annual dividend growth rate figures for Amadeus Fire (AAD.DE) over the past 20 years shows a highly erratic pattern. The values range from -100% to upwards of 203.45%. Despite the high standard deviation, the average growth rate is 25.43%. This surpasses the 5% benchmark but offers little consistency. Consequently, while the Dividend Growth Rate technically meets the criterion, the irregularity indicates potential instability. Hence, a deeper analysis into the specific causes behind these fluctuations is warranted to determine their reliability.

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

The Average Payout Ratio is the measure of the percentage of earnings paid to shareholders in dividends. A lower ratio indicates that the company retains more earnings for growth and stability.

The average payout ratio for Amadeus Fire (AAD.DE) over the last 20 years is 32.34%. This is significantly below the threshold of 65%, which is excellent. The low average suggests that the company has been prudent in its dividend distribution, ensuring that a substantial portion of earnings is retained for business growth and other needs. Even though there have been years where the payout ratio exceeded 65%, including significantly high values in some years (e.g., 2009, 2013, 2015, 2016, 2017), the overall trend remains very good. This trend demonstrates fiscal responsibility and provides assurance of the company's focus on sustainable growth and financial health.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. This criterion is crucial to ensure that a company is not overextending itself by paying dividends from its reserves or by incurring debt, which can be unsustainable in the long run. A dividend cover ratio above 1 indicates earnings are sufficient to cover the dividend payments.

To evaluate if Amadeus Fire's (AAD.DE) dividends are well covered by earnings, it's important to observe both the Earnings per Share (EPS) and Dividend per Share (DPS) figures over the years. Starting with a negative EPS in 2003 and fluctuating years of positive and negative cover ratios indicates some inconsistency in earnings relative to dividends. The sustainable payout ratio should ideally be above 1.0. Although certain years like 2012 and 2019 show promise with ratios above 1, others such as 2021 and 2023 reveal alarming trends with coverage below 0.5 or zero, which could imply insufficient earnings for dividends and a potential risk for dividend sustainability in lean years. Recent positive changes in millions from earnings like in 2019's EPS of 5.9545 or 2022's 6.7145 against the DPS imply stronger positions those particular years but variance continues to pose alarms.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicate that a company generates sufficient free cash flow to comfortably pay out its dividends. It ensures the sustainability of dividend payments without stressing the financial health of the company.

Analyzing Amadeus Fire's (AAD.DE) free cash flow and dividend payout from 2003 to 2023, there is considerable variability in how well dividends are covered by cash flow. In earlier years like 2003, the coverage was more than adequate at 1.37, but there are also years, such as 2005, where the coverage ratio plummets to 0.139, indicating insufficient cash flow to cover dividends. The recent trends from 2019 to 2021 also show weakening coverage, with ratios dropping below 0.3. While the company had solid coverage periods, the lack of consistency and periods with zero coverage point toward potential risks in sustaining future dividend distributions.

Stable Dividends Since the Company Began Paying Dividends?

This criterion evaluates whether the dividend per share has remained stable over the past 20 years, which is crucial for income-seeking investors relying on predictable payments.

Over the past 20 years, Amadeus Fire's dividend per share has demonstrated significant fluctuations, and there were instances of non-payment (e.g., in 2004 and 2020). For instance, in 2004, the company did not issue any dividend, a stark contrast from the previous year. Similarly, in 2020, no dividends were paid out, presumably due to the financial impact of the COVID-19 pandemic. Despite these gaps, there were years of strong growth such as from 2006 (€0.29) to 2007 (€0.88), and from 2018 (€3.96) to 2019 (€4.66). While most years show positive trends, the interruptions make the overall trend less stable for pure income seekers. Therefore, the trend does not meet the criterion of stable dividends as it fails to provide consistent growth or maintain a minimum dividend payout in all years.

Dividends Paid for Over 25 Years?

Dividends paid continuously for over 25 years reflect a company's long-term commitment to returning value to its shareholders. It also indicates stability and reliability in its earnings.

Amadeus Fire (AAD.DE) has paid dividends fairly consistently from 2001 to 2023, with minor disruptions in 2004 and 2020 where no dividends were declared. This record shows a strong commitment to returning value to its shareholders, despite occasional interruptions. The trend generally indicates financial stability and reliability, but the lack of continuous payments for every single year means that they do not fully meet the criterion of having paid dividends for over 25 years continuously. Still, the company has shown resilience, especially considering significant payouts like €4.66 per share in 2019, albeit moderated due to external crises like in 2020. Overall, this trend is quite positive but not perfect.

Reliable Stock Repurchases Over the Past 20 Years?

Analyzing Amadeus Fire's stock repurchase activity over the past 20 years helps investors understand the company's capital allocation efficiency and shareholder value maximization.

Over the past 20 years, Amadeus Fire has had only three reliable years of stock repurchases: 2004, 2005, and 2006. Their buyback impact has been minimal, with shares outstanding decreasing by just 4.49% from 2003 to 2006. The average annual repurchase rate stands at 0.1728%, a rather insignificant figure indicating that stock repurchases have not been a pivotal strategy for the company. Interestingly, an increased share count from 2018 raises questions about potential dilution, signaling caution for investors. Overall, the trend of minimal repurchases is unsatisfactory for those seeking consistent capital return via buybacks.