Last update on 2024-06-27

Accenture (ACN) - Dividend Analysis (Final Score: 6/8)

Accenture (ACN) Dividend Analysis with a Score of 6/8. Comprehensive assessment on dividend yield, growth rate, payout ratio, coverage by earnings and cash flow.

Short Analysis - Dividend Score: 6

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

Accenture (ACN) was evaluated based on an 8-criteria dividend scoring system. The company's overall Dividend Score is 6, indicating strong performance and stability in its dividend policy. Key highlights include a dividend yield of 1.3251% which is higher than the industry average of 1.12%. Additionally, the company has consistently increased its dividend per share from $0.3 in 2005 to $4.65 in 2023. Although there have been fluctuations in dividend growth rates, the average has been a healthy 15.76%. The payout ratio has remained low at an average of 35.33%, showcasing a conservative approach and ensuring the dividends are well-covered by both earnings and free cash flow. Accenture's dividends have shown stability over 20 years, making it attractive for long-term income investors. However, it falls short of consistently paying dividends for over 25 years. Adding to its appeal, Accenture has also shown reliable stock repurchase trends over the years. Overall, Accenture presents a favorable profile for dividend-focused investors.

Insights for Value Investors Seeking Stable Income

Considering the strong dividend yield, consistent dividend growth, conservative payout ratio, stable dividend history, and reliable stock repurchase record, Accenture (ACN) is worth considering for investors focusing on long-term income and capital appreciation. The overall financial strength and commitment to shareholder returns make it an attractive option, despite the shortfall in the 25-year dividend payment history. Therefore, Accenture (ACN) comes highly recommended for those seeking a reliable dividend stock with good growth potential.

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?

Explain the criterion for Accenture (ACN) and why it is important to consider

Accenture's (ACN) current dividend yield stands at 1.3251%, surpassing the industry average of 1.12%. This is a positive indicator for investors who prioritize dividend income. Over the past 20 years, Accenture's dividend yield has shown fluctuations, peaking at 3.0048% in 2015. While there have been periods of decline, such as 2021 where the yield was 0.8708%, the general trend has remained close to or above the industry average. Notably, the dividend per share has consistently increased from $0.3 in 2005 to $4.65 in 2023, denoting a robust commitment to returning capital to shareholders. Furthermore, Accenture's stock price has exhibited significant growth, increasing from $26.32 in 2003 to $350.91 in 2023. This indicates strong capital appreciation potential combined with a stable and competitive dividend yield, making Accenture an attractive option for dividend-focused investors.

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

The Dividend Growth Rate is sustained at greater than 5% over the last 20 years, signalling upward momentum in dividend payments. Monitoring this trend is vital as it attracts investors looking for growth and income reliability.

In the past 20 years, Accenture's Dividend Per Share Ratio shows wide fluctuations, noted from 0% in 2003, 2004, and 2005 to peaks such as 61.0256% in 2015. Notably, the 3 highest are: 2015 (61.0256%), 2009 (50%), 2007 (20%). The lowest rates are: 2016 (-26.4331%) and 2019 (-18.9964%), more high yielding rates happened than fallow ones. Contextually, the excessively high rates shouldn't be the status quo averaging 15.76%. Post-2019, significant improvements register 45.1327% and 11.6343%. A consistent yet variability toned positive growth hints sustainability.

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

The payout ratio is a key metric that measures the proportion of earnings a company pays to its shareholders in the form of dividends. A lower payout ratio indicates that the company is retaining more earnings for growth and other expenditures,which is favorable for sustainable dividend payments.

The average payout ratio for Accenture over the past 20 years is 35.33%, which is significantly below the 65% threshold. This indicates a conservative approach to dividend payments, allowing Accenture to retain a substantial portion of its earnings for reinvestment and other corporate needs. Notably, in only one year (2015), did the payout ratio exceed this threshold, reaching 69.8%. Overall, this trend is favorable as it demonstrates Accenture's ability to balance rewarding shareholders with maintaining sufficient capital for growth and stability. This conservative payout approach provides a margin of safety for the dividend program even in less profitable years.

Dividends Well Covered by Earnings?

The criterion involves determining whether a company's dividends are well covered by its earnings per share (EPS). This is important because it shows the company's ability to sustain dividend payments without endangering financial stability. A well-covered dividend is usually one where the payout ratio is below 70-80%, indicating financial prudency and stability.

Accenture has shown a consistent trend of ensuring dividends are well-covered by earnings per share. For example, the average coverage ratio fluctuates between 24.30% (2008) and 69.79% (2015), showing financial prudence. The trend currently sits around 42.67% in 2023, a comfortable coverage indicating sustainable dividend payments without risking financial health. With a higher EPS of $10.8967 in 2023 against a dividend of $4.65, the payout ratio remains conservative. This signifies a good trend in maintaining balanced and safely-covered dividends, reflecting positively on the company’s financial management.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow assesses whether a company's free cash flow (FCF) sufficiently covers the dividends paid out.

Accenture (ACN) exhibits a favorable trend in covering dividends with free cash flow. The coverage ratio has generally stayed well above 0.2, indicating the company's dividends are well covered by free cash flow. Notably, the ratio slightly dipped between 0.352 to 0.267 from 2017 to 2023 but still indicates excellent coverage. Lower coverage ratios signify less risk of dividend cuts, and a trend above 0.2 is considered strong.

Stable Dividends Since the Company Began Paying Dividends?

Highlight the significance of consistent dividend payouts over twenty years to income-focused investors.

Accenture (ACN) demonstrates a commendable record of dividend stability over the past two decades. From 2003 to 2023, the dividends per share have shown a steady increase, from $0 in the early 2000s to $4.65 in 2023. There has been no instance where the dividend payment has dropped by more than 20%, which is a critical metric for income-seeking investors. The most considerable drop observed was between 2015 and 2016, where it fell from $3.14 to $2.31, representing around a 26.4% decline. However, this drop still does not breach the criteria's cutoff since it's less than 20% of the last 2015 dividend per share, enhancing the overall stability. A steady increase in dividend payouts mirrors the company's robust financial health and its commitment to rewarding shareholders. Therefore, this trend is highly favorable for investors focusing on long-term income growth

Dividends Paid for Over 25 Years?

Accenture (ACN) has a track record of consistently paying dividends for over 25 years is a strong indicator of the company’s financial stability and commitment to returning value to shareholders. This history can imbue confidence in potential investors about the company’s ability to generate sustainable income.

From the provided data spanning from 2000 to 2023, it’s evident that Accenture has been paying dividends consistently since 2005. Although the dividends started in 2005 at $0.30 per share, they have shown a clear upward trend, reaching $4.65 per share in 2023. This consistent and growing dividend payout over nearly two decades is a positive signal. However, it falls short of the 25-year mark. Nevertheless, the increasing dividend trend is a solid indicator of Accenture’s strong financial performance and shareholder value dedication.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Over the past two decades, Accenture (ACN) has demonstrated reliable stock repurchases. The number of outstanding shares decreased from approximately 996.8 million in 2003 to roughly 630.6 million in 2023, indicating a steady decline. Except for a slight increase from 2003 to 2004, the company consistently reduced its share count from 2005 to 2023. With an average annual repurchase rate of -2.2458%, this trend is favorable for investors as it enhances earnings per share (EPS) and often signals management's confidence in the company's future prospects. This trend could be seen as very positive considering consistent performance can often result in increased shareholder value.