Last update on 2024-06-27

Akzo Nobel (AKZA.AS) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis of Akzo Nobel (AKZA.AS), evaluating performance and stability using an 8-criteria system with a final score of 5/8.

Short Analysis - Dividend Score: 5

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

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

The dividend yield of Akzo Nobel (AKZA.AS) stands at 2.6464%, which is above the industry average of 2.37%. A higher dividend yield typically indicates a higher return on investment for shareholders in terms of dividends. Observing the historical data over the last 20 years, the dividend yield has fluctuated significantly, reaching a peak value of 17.8923% in 2019 and a low of 1.9767% in 2014. This suggests inconsistency in the company's dividend policy, which is something shareholders need to consider. The high value in 2019 skewed the average data. Generally, a consistent and slightly higher than average dividend yield is seen positively but higher yields could signal potential issues in stock price or unsustainable high payouts. In this context, the current yield signals positive return yet warrants cautious optimism due to inconsistencies.

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

The Dividend Growth Rate measures the annual average percentage increase in dividend payments from one year to the next over a specified period. This is important as it indicates the company's ability to increase its dividend payments, reflecting financial health and shareholder value.

Analyzing Akzo Nobel's Dividend Ratio from 2003 to 2023, we notice highly volatile dividend payments with significant spikes and drops. It even had years with negative ratios (e.g., 2008: -20.4678, 2018: -60.446) and omissions (e.g., 2013, 2023: 0). Despite an average Dividend Ratio of 33.11%, this extreme variability and inconsistencies point to an unstable dividend growth trend. Such a pattern fails to suggest a reliably higher-than-5% growth rate over the 20-year period. Consequently, we infer that the Dividend Growth Rate does not consistently meet the 5% threshold, which can be a red flag for dividend-oriented investors looking for stable and predictable income streams.

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

The payout ratio indicates what proportion of earnings a company is paying to shareholders in the form of dividends. A ratio lower than 65% is considered sustainable.

The average payout ratio of Akzo Nobel over the last 20 years is 76.58%. This ratio points towards a generally high payout, which may signify inconsistent profitability or aggressive dividend distributions that aren't sustainable in the long term. Additionally, numerous years, especially 2019 with an astronomical 641.11% and 2022 at 98.29%, exhibit concerningly high payouts sometimes surpassing annual earnings, thus raising potential red flags about the company’s future dividend sustainability. Overall, this trend is negative.

Dividends Well Covered by Earnings?

Dividends are well covered by earnings.

To evaluate dividend coverage for Akzo Nobel (AKZA.AS), we consider the Earnings Per Share (EPS) and compare it to Dividends Per Share (DPS). A ratio above 1 means earnings sufficiently cover dividends. From 2003 to 2023, the coverage ratio varies significantly: * Notably high ratios: 0.561 in 2003, 6.411 in 2019 * Below 1: -0.14 in 2012 The 2019 spike at EPS 6.411 reveals an extraordinary cover. Historically, earnings sufficiently cover dividends (above 1), indicating prudent company management. The questionable coverage in negative ratios suggests earnings dip or special payouts. Beneficial or alarming trends demand attention for sustainable returns.

Dividends Well Covered by Cash Flow?

what does it mean for dividends to be well covered by cash flow and why is it important?

Dividends well covered by cash flow means that a company's free cash flow (FCF) substantially exceeds its dividend payouts, ensuring it generates enough cash to not only support but also sustain its dividend distributions. A coverage ratio above 1 indicates that the company has more than enough FCF to cover dividends, which is a positive sign of financial health and dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividends over a long period is crucial because it indicates the company's consistent performance and reliability in generating shareholder returns. Investors, especially those seeking income, prefer companies that can maintain or grow their dividends steadily.

Examining Akzo Nobel's dividend per share from the past 20 years, we observe fluctuations in the payouts. The dividend per share ranged from 1.326 to 16.2176. There were slight decreases in some years, such as 2008 to 2009, 2014 to 2015, and 2017 to 2018. Nevertheless, these changes did not result in a drop of more than 20% in any given year. Specifically, the dividend decreased from 2.1375 to 1.7 in 2009, from 1.5137 to 1.282 in 2014, and from 6.57 to 2.5987 in 2018, reflecting drops but staying within the 20% limit. This trend demonstrates relative stability within the acceptable thresholds, making Akzo Nobel an attractive choice for income-focused investors. Furthermore, notable spikes in the dividend, for instance, in 2019 (16.2176), underscore periods of exceptional performance or one-time payouts.

Dividends Paid for Over 25 Years?

The criterion assesses whether a company has consistently paid dividends for over 25 years, highlighting its financial stability and shareholder commitment.

Akzo Nobel (AKZA.AS) has a strong dividend-paying history, distributing dividends consistently from 1999 through 2023. This trend underscores a robust commitment to returning value to shareholders. The ability to maintain dividends, especially during economic downturns or business cycles, reflects a resilient financial stature. Notably, substantial dividends in some years, such as 2008 and 2018-2019, indicate periods of significant profitability. Overall, meeting this 25-year dividend criterion positively demonstrates financial stability and reliable shareholder returns.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Akzo Nobel (AKZA.AS) and why it is important to consider

Reliable stock repurchases over the past 20 years indicate a company's commitment to returning value to its shareholders. It also signals financial health and prudent capital management. For Akzo Nobel, analyzing the years 2004, 2007, 2008, 2009, 2010, 2019, 2020, 2021, 2022, and 2023, we see multiple instances of stock buybacks. This consistency suggests well-deployed surplus capital. The company's average repurchase rate of -1.9073% yearly also suggests it has been effectively reducing share count. For example, from 2009 to 2010, shares decreased from about 208.7 million to 208.5 million, followed by a consistent decline. However, a declining share count might also result from disposals or other capital maneuvers. This trend is generally positive and suggests a disciplined approach, signaling good capital management and creating potential for ownership value appreciation.