Last update on 2024-06-28

Adesso (ADN1.DE) - Dividend Analysis (Final Score: 4/8)

Analyze Adesso (ADN1.DE)'s dividend policy performance with an 8-criteria scoring system, including yield, growth rate, payout ratio, and coverage.

Short Analysis - Dividend Score: 4

We're running Adesso (ADN1.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The analysis of Adesso (ADN1.DE) using an 8-criteria system highlights several key points about its dividend policy. First, Adesso's current dividend yield (0.6052%) is lower than the industry average (1.12%) and has been declining. While its average annual dividend growth rate of 8.78% seems promising, this has been inconsistent with peaks and troughs. The company's payout ratio has generally been around 30.21%, staying below the 65% threshold, which is good for balance between growth and dividends. However, their dividend coverage by earnings has been inconsistent, with several instances of ratios below 1. Adesso has displayed stable dividend growth since it began payouts in 2010 but hasn't met the 25-year consistency criterion. Reliable stock repurchases are minimal with an overall trend of increasing shares.

Insights for Value Investors Seeking Stable Income

For potential investors, Adesso's dividend policy presents some mixed signals. While they seem committed to growth and balancing dividends with reinvestment, the inconsistency in dividend payouts and coverage by earnings are concerns. If you're looking for stable and predictable dividend income, you might want to consider other options. However, if you are okay with some volatility but potential high returns, it might still be worth looking into more deeply.

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 measure of the annual dividends paid out by a company relative to its stock price, indicating the income an investor might expect.

Adesso's current dividend yield of 0.6052% is notably lower than the industry average of 1.12%. Over the last 20 years, Adesso's dividend yield has fluctuated, reaching as high as 2.8125% in 2012 but generally trending downward. This trend, combined with the company's significantly reduced yield relative to the industry, suggests that while Adesso has experienced stock price appreciation, its dividend policy may not be as generous as some of its competitors. This trend might be seen as a negative for income-focused investors.

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

The Dividend Growth Rate measures how the dividend payouts have increased over time. A high growth rate is often indicative of a company's successful performance and commitment to returning value to shareholders. It is a critical criterion for evaluating the attractiveness of a stock for dividend investors.

Adesso's dividend payouts have fluctuated significantly over the past two decades. Dividend growth has experienced intermittent growth phases and periods of stagnation. Notably, the average dividend ratio from 2006 to 2023 is approximately 8.78%. While this is technically higher than a 5% growth threshold, the inconsistency in dividend payouts underscores a volatile strategy. The absence of dividends in numerous years, coupled with peaks and troughs, may indicate that Adesso is still stabilizing its dividend distribution strategy. This irregular pattern might be a red flag for some investors looking for stable and predictable dividend income. However, the years in which dividends were paid often see substantial growth, suggesting potential high returns despite the volatility.

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

Average Payout Ratio lower than 65% means a company retains enough profit to reinvest in its growth while providing a stable dividend to shareholders.

Adesso's (ADN1.DE) payout ratio over the last 18 years has been quite volatile but it averages out to approximately 30.21%, which is comfortably below the 65% threshold. The payout ratio has peaked above this threshold in some years, notably in 2012 (149.38%) and 2023 (132.14%). However, these appear to be outliers. Generally, the company's payout ratio has remained under control, which suggests that Adesso balances well between returning value to shareholders and retaining capital for growth. This lower average payout ratio is a good indicator for investors looking for sustainable dividend income combined with potential capital appreciation.

Dividends Well Covered by Earnings?

When analyzing if dividends are well covered by earnings, we compare the company's earnings per share (EPS) to the dividends per share (DPS). This ratio helps assess the sustainability of ongoing dividend payments and the company's ability to meet them from its profits.

For Adesso (ADN1.DE), the figures for EPS and DPS from 2006 to 2023 show variations in coverage. A dividend coverage ratio (EPS/DPS) of over 1 indicates that the company earns sufficiently to cover its dividend obligations. However, ratios significantly below 1 suggest potential insufficiency in earnings to support dividends. Notably, the coverage ratio dropped to critically low levels repeatedly, such as close to 0 during 2006–2013 and again in 2022. Conversely, openings of strong coverage ratios with higher EPS compared to DPS emerged in instances such as 2012 and 2023. However, the trend does not consistently support robust coverage over the analyzed period with variability; thus, signaling potential volatility in earnings or payout policy implications for Adesso’s dividend distribution sustainability.

Dividends Well Covered by Cash Flow?

Explain the criterion for Adesso (ADN1.DE) and why it is important to consider

Dividends well covered by cash flow measure a company's ability to pay its dividends out of the cash generated from its operations, rather than from other financing sources. This criterion is vital because it highlights the sustainability of dividend payments: if dividends are well covered by cash flow, it indicates that the company is generating enough cash to meet its dividend obligations without resorting to debt.

Stable Dividends Since the Company Began Paying Dividends?

Why is it important to have stable dividends over the past 20 years for Adesso (ADN1.DE)?

Stable and growing dividends over the years are a marker of financial health and resiliency for a company. For Adesso (ADN1.DE), let's scrutinize the provided annual dividend figures for the past 18 years. Starting from zero dividends until 2010, it shows growth from €0.15 in 2010 gradually rising to €0.65 in 2023. This indicates consistent appreciation without any overlapping periods of decrements larger than 20%. This past performance reflects positively on Adesso’s ability to generate reliable income for its shareholders and suggests a positive financial trajectory.

Dividends Paid for Over 25 Years?

Explain the criterion for Adesso (ADN1.DE) and why it is important to consider

Dividends paid consistently for over 25 years demonstrate a company’s commitment to returning profit to shareholders, signaling financial stability and predictable cash flow. While Adesso (ADN1.DE) does not meet the 25-year criterion as their dividends payments started in 2010, the steady increase since then is promising, demonstrating a growing profitability. This could indicate that the company is on a positive trajectory. However, it’s important for investors seeking long-term commitment to be aware that the 25-year consistency requirement is not met.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

The number of shares for Adesso (ADN1.DE) has primarily shown an upward trend over the past two decades. Starting from 4,372,800 shares in 2006, the number has risen consistently, reaching 6,515,102 shares in 2023. The share count briefly decreased in 2007 and 2019, indicating possible share repurchases during these years. Share repurchases can be a positive indicator because they may suggest that the company believes its stock is undervalued. However, with an average of only 2.5897 share buybacks over 20 years, the trend towards decreasing shares is minimal. This could imply that the company has prioritized other uses for its capital consistently over the years.