Last update on 2024-06-27

Aroundtown (AT1.DE) - Dividend Analysis (Final Score: 4/8)

Analyze Aroundtown (AT1.DE) dividend policy with an 8-criteria scoring system, exploring performance, stability, and long-term reliability. Final Score: 4/8.

Short Analysis - Dividend Score: 4

We're running Aroundtown (AT1.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Aroundtown (AT1.DE) has a mixed record when it comes to dividend performance and stability based on an 8-criteria scoring system, achieving a score of 4 out of 8. The company's dividend yield for 2023 is 0%, far below the industry average of 2.99%, which would concern income-seeking investors. There's significant volatility in the dividend growth rates, with some years showing extremely high growth and others showing sharp declines. Despite this inconsistency, the company's payout ratio has been very low, averaging around 5.03%, suggesting a conservative approach. However, the low payout ratio may not be entirely positive as earnings and cash flow have been inconsistent and sometimes negative. The company's dividends have not been stable over the past decade, with several years where no dividends were paid at all. With less than 25 years of dividend history and inconsistent stock repurchase practices, the overall stability and performance of Aroundtown's dividend policy are questionable.

Insights for Value Investors Seeking Stable Income

Considering the significant volatility and inconsistencies in Aroundtown's dividend payments and financial performance, coupled with the low and fluctuating dividend yield, investors seeking stable and reliable dividend income might want to look for other opportunities. While there are some positives like the conservative payout ratio, the overall trend and inconsistency make Aroundtown less attractive for dividend-focused investors. It may be worth monitoring for future improvements, but caution is advised for now.

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 represents the percentage of a company's current share price that it pays out in dividends each year.

Aroundtown's dividend yield for 2023 is 0%, significantly below the industry average of 2.99%. Historically, Aroundtown's dividend yield has been volatile, with fluctuations from 0% to a peak of 10.55% in 2022. The company's stock price has also seen considerable variation, which affects the dividend yield percentage. Given the high fluctuations and the current 0% yield, this trend is concerning for investors looking for consistent income, especially since the industry average suggests better stability.

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

The Dividend Growth Rate measures the annualized percentage rate of dividend growth over a specified period. A growth rate higher than 5% over 20 years indicates robust and increasing shareholder returns. This criterion is crucial as it reflects the company's commitment to returning profits to shareholders and suggests financial health and stability.

When evaluating Aroundtown (AT1.DE) based on the provided Dividend Ratio data, it's important to note that the dividends per share have shown extreme volatility. For some years such as 2017 and 2021, the growth rates are exceptionally high (over 500% and 900%, respectively). However, for other years, the rates are negative, with significant decreases like -28.2209% in 2018 and -91.716% in 2020. Given an average dividend ratio of approximately 116.34%, one might initially assume strong growth. However, the wide fluctuations from year to year suggest inconsistency. The overall trend in dividends is not stable, indicating that while the company has had years of substantial dividend growth, it has also faced years of considerable decline. Therefore, the dividend growth rate’s stability and reliability can be questioned, especially compared to the desired steady growth rate of above 5% observed consistently over each year for 20 years. In summary, while there are years with high dividend growth, the inconsistency and volatility imply that Aroundtown does not consistently meet the criterion we set for a stable, above-5% dividend growth rate over a prolonged period.

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

The average payout ratio is a key metric indicating the proportion of earnings paid out as dividends. An average below 65% suggests a sustainable dividend.

Aroundtown (AT1.DE) shows an average payout ratio of approximately 5.03% over the last 20 years. This is significantly below the threshold of 65%, indicating a very conservative and potentially sustainable dividend policy. For instance, the payout ratio in most years has remained exceedingly low, except for 2017 and 2021, which saw ratios of 22.995% and 34.3535%, respectively. There was also a negative payout ratio in 2022, suggesting some anomalies. Overall, maintaining such a low ratio insulates the company against earnings volatility and ensures that dividends can be sustained or increased over time. This trend is positive for investors seeking reliable dividend income.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

For Aroundtown (AT1.DE), the Dividend Cover Ratio is derived from the EPS and DPS data. A higher ratio is generally favorable. The figures show varying results: In 2017, 22.99% of the earnings were used to pay out dividends, a solid, sustainable figure. Conversely, in 2023, the earnings were negative (-1.6781 EPS with 0 dividends). Reviewing these numbers, it's evident that while dividends were sustainable up to 2020, the coverage ratio shows inconsistency and is negative during years with negative earnings. This trend suggests a problem in consistent dividend sustenance, and it does not bode well for future payouts if the earnings trend continues to be negative.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

Analyzing the free cash flow (FCF) figures alongside the dividend payout amount of Aroundtown (AT1.DE), it is observed that from 2013 to 2023, the company has shown a fluctuating pattern in its ability to cover dividends through cash flow. The FCF was negative from 2013 until 2018, which indicates that the company was not generating enough cash to cover its dividends, with ratios as low as -0.589 in 2017. However, the situation reversed from 2019 onward, with significant improvement, reaching positive FCF and much better coverage ratios such as 2.896 in 2019 and 0.403 in 2021. This suggests a strong turnaround in the company's financial health. The trends in 2022 and 2023, where the ratio hovers around 0.222 and 0, respectively, show a diminishing but still positive ability to cover dividends until 2023 where no dividends were paid, likely reflecting either a strategic reinvestment scheme or an indication of caution amid the challenging economic climate. This overall trend is indicative of positive financial reform but raises caution for recent periods.

Stable Dividends Since the Company Began Paying Dividends?

Stable Dividends Over the Past 20 Years. Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

The analysis of Aroundtown's dividends per share over the past decade shows volatility and inconsistency. Notably, dividends were not paid at all for many years (2013 to 2015, and again in 2023). Furthermore, the years from 2016 to 2022 presented fluctuations, including a significant drop from 0.2535 in 2019 to 0.021 in 2020. Such inconsistency and sharp declines make it challenging for income-seeking investors to rely on stable dividend returns from this company. While there might not be a single year's drop exceeding 20%, the overall pattern reveals instability, rendering this trend unfavorable for those prioritizing stable dividends.

Dividends Paid for Over 25 Years?

Assessing if dividends have been paid for over 25 years reveals a company's commitment to returning value to shareholders. A long history of dividend payments usually indicates stability and consistent profitability.

Aroundtown (AT1.DE) has not paid dividends for over 25 years. The provided data shows dividend payments only from 2016 to 2023. Specifically, dividends per share started in 2016 with €0.051 and fluctuated over the years, reaching a high of €0.326 in 2017 and dropping to €0 in both 2020 and 2023. This short dividend history is neither robust nor consistent, pointing to financial fluctuations and possibly instability. For long-term income-focused investors, this trend may be concerning as it does not promise historical reliability in dividend payments.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

In evaluating Aroundtown (AT1.DE)'s stock repurchase practices over the past 20 years, it is essential to assess whether the company has engaged in consistent and strategic buybacks to enhance shareholder value. This criterion is important as regular stock repurchases can signal financial health, as well as confidence in the company’s future prospects by its management. It also reduces the number of shares available in the market, which can increase earnings per share (EPS) and drive stock prices higher.