Last update on 2024-06-27

Allstate (ALL) - Dividend Analysis (Final Score: 7/8)

Analyze the performance and stability of Allstate's (ALL) dividend policy with a 7/8 score using an 8-criteria scoring system.

Short Analysis - Dividend Score: 7

We're running Allstate (ALL) 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?

The dividend yield represents the annual dividend payments to shareholders expressed as a percentage of the stock's current price.

Allstate's current dividend yield of 2.5432% is marginally higher than the industry average of 2.47%, indicating a slightly more attractive return on investment from dividends compared to the industry standard. Over the last 20 years, Allstate's dividend yield has shown considerable fluctuations, with peaks in 2008 (5.0061%) and significant declines, especially in 2009 (2.6631%) through 2017 (1.4134%). The most recent trend indicates a strengthening dividend yield, returning above 2.5% after some years of subpar performance. This suggests a positive trend, contributing to Allstate's competitiveness in offering shareholder returns through dividends. Investors should also note the broader industry trends where yields have fluctuated wildly, especially post-2008 financial crisis, underscoring the relative stability Allstate has exhibited despite market volatilities.

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

The Dividend Growth Rate measures the annualized percentage rate of growth of a company's dividend. A rate above 5% is considered strong and can indicate robust financial health and commitment to returning value to shareholders.

The Dividend Growth Rate for Allstate (ALL) over the last 20 years generally shows a fluctuation with some negative periods, particularly in 2009, but rebounds in subsequent years. For example, in 2021, there was a staggering 50% increase, though this is not consistent across all years, leading to an average rate of 8.83%. This average growth rate is above the 5% threshold, indicating a favorable trend for dividend investors. However, potential volatility in the dividend payouts should be noted.

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

The average payout ratio reflects the proportion of earnings a company pays to shareholders as dividends. Ideally, a payout ratio lower than 65% ensures that the company retains enough earnings for growth and financial stability.

Allstate (ALL) has an average payout ratio of -4.65% over the last 20 years. This figure is significantly skewed by abnormal values in years like 2008, 2022, and 2023, where the payout ratios were -53.342%, -71.5353%, and -497.0679% respectively. These negative values indicate periods of significant net losses, but removing these outliers would reveal that Allstate has generally maintained a payout ratio well below the 65% threshold. This is advantageous since it indicates a conservative approach to dividends, ensuring ample retained earnings for sustainable growth and financial stability.)

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. This criterion is crucial because it ensures that the company generates enough profits to sustain its dividend payouts. A payout ratio significantly over 1 or negative indicates potential financial distress or unsustainable dividend levels, while a ratio comfortably below 1 suggests a healthy, sustainable dividend policy.

Allstate's (ALL) historical data shows that its dividends were typically well-covered by earnings from 2003 to 2007, with the payout ratios being below 0.5, pointing to sustainable dividend distributions. However, significant challenges arose when the earnings per share took a dive into negative territory in 2008 and fluctuated drastically afterward. The payout ratio in years such as 2008 (-0.53) and especially 2022 (-0.71) and 2023 (-4.97) decidedly indicate unsustainable dividends during those periods. The notable coverage in 2021 (0.59) indicates a rebound and more robust financial health, but the latest figures for 2022 and 2023 call for caution and concern about dividend sustainability.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow indicates the capacity of a company to pay dividends from its generated cash flow. It's essential for understanding sustainability and financial health.

The historical data for Allstate (ALL) demonstrates that its dividend payout has consistently been well-covered by its free cash flow. In most years, the ratio of dividend payout to free cash flow has been significantly below 1, indicating that the company generates more cash flow than what is paid out in dividends. From 2003 to 2023, the coverage ratio fluctuates, with notable strengths observed between 0.114 and 0.260, which is a good indicator. Despite a higher payout ratio in some years like 2013 (0.0887) and 2011 (0.258), the overall trend suggests that Allstate maintains a healthy balance between its generated cash flow and its dividend obligations. This indicates financial stability and a less risky dividend profile for investors, contributing to shareholder confidence and the sustainability of dividend payments.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividends reflects a company's financial health and commitment to returning value to shareholders.

Allstate (ALL) has demonstrated commendable stability in its dividend payments over the past two decades, despite the significant drop in 2008. The dividend per share dropped from $1.64 in 2007 to $0.80 in 2008, a drop well over the 20% threshold. Apart from this year, Allstate has been able to steadily increase its dividend payments. Overall, the long-term trajectory shows a healthy recovery and growth, reflecting management's commitment to distributing earnings back to its shareholders. While the 2008 drop is a point of concern, the subsequent years exhibit strong performance and increasing dividends, which provide confidence to income-seeking investors.

Dividends Paid for Over 25 Years?

Will Allstate (ALL) continue to pay dividends in the long term (a streak of over 25 years)?

Allstate has paid consistent dividends each year from 1998 to 2023, demonstrating a strong commitment to returning value to shareholders. Over this period, the dividend per share has generally followed an upward trend, with a noticeable peak in 2021 ($3.24). Despite the economic difficulties in 2009, where it dropped to $0.8, Allstate quickly recovered, further raising the dividends year after year. This consistency and growth in dividend payments indicate good financial health and a shareholder-friendly policy, enhancing investor confidence in Allstate's long-term stability and commitment to dividends.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Interpreting the share repurchase trend from 2003 to 2023 illustrates consistent reduction in the number of outstanding shares, which is generally a positive signal for investors. Allstate has successfully reduced its share count from 706.2 million in 2003 to 262.5 million in 2023, reflecting a CAGR of around -4.7978%. This indicates disciplined capital allocation and potentially increasing shareholder value. Reliable repurchases in most of the years within this two-decade span (specifically excluding 2010) enhance investor confidence by signaling management’s commitment to returning capital to shareholders.