Last update on 2024-06-25

Boeing (BA) - Dividend Analysis (Final Score: 5/8)

Discover Boeing (BA) dividend performance with an 8-criteria analysis scoring 5/8. Learn about its dividend yield, growth rate, payout ratio, and more.

Short Analysis - Dividend Score: 5

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

Boeing's dividend policies are evaluated based on 8 criteria, with the company scoring a 5 out of a possible 8. Historically competitive, Boeing's dividend yield has recently plummeted to 0%, significantly trailing the industry's average of 1.16% in 2023. The company's average annual dividend growth rate over the past 20 years barely surpasses the 5% mark, showing both highlights and severe downturns. While earlier payout ratios were healthy and dividends were generally well-covered by earnings and cash flow, recent years (from 2017 onwards) signal financial struggles and potential risk for investors. The most problematic areas include stability and consistency, as evidenced by dividend suspensions since 2020. Despite 20-plus years of regular payments, broken trends from 2019 onward pose concerns. Stock repurchasing shows an effort to return capital to shareholders, though this, too, has faced interruptions since the crises of the 737 Max and the COVID-19 pandemic.

Insights for Value Investors Seeking Stable Income

Considering Boeing's considerable recent financial troubles and suspension of dividend payouts, it appears to be a risky option for dividend-focused investors seeking stable and consistent returns. The historical precedence of occasional high returns cannot overlook the prevalent instability. For interested investors, more cautious evaluation or alternative avenues in the aerospace sector might be advisable.

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 the ratio of a company's annual dividend compared to its share price. A high yield can attract income-seeking investors. It's essential to compare it within the industry context.

The dividend yields for Boeing over the last 20 years show a trend peaking around 2018 at 2.52%, after which it dropped dramatically to 0% from 2020 onwards. Comparing this to the industry average of 1.16% in 2023, Boeing significantly underperforms. When looking at the historical data, Boeing's yields have been competitive, often surpassing industry averages, like in 2008 and 2016. However, the recent yield dropping to 0% is alarming and signals potential financial distress or a shift in capital allocation strategy. This trend is unfavourable as it renders Boeing less attractive to dividend-focused investors, especially given the industry's modest average yield.

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

Dividend Growth Rate evaluates the annualized percentage rate of growth in a company's dividend payments over a period, in this case, 20 years.

Analyzing Boeing's Dividend Growth Rate from 2003 to 2023, we see varied results. The Dividend Per Share Ratio fluctuates significantly, with some high peaks, such as a 50.5155% increase in 2014 and a substantial 100% decrease in 2021. While some years show stellar growth, declines in other years (particularly the sharp dips during 2020-2022 due to presumably the pandemic and operational challenges) drag the average. Overall, achieving an average growth rate of 5.1792% just over the threshold implies that Boeing has managed to sustain dividend growth marginally above 5%. This is promising as it shows potential consistent growth but can be overshadowed by the few extreme drops, making this indicator both favorable and cautioned against future volatility.

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

Explain the criterion for Boeing (BA) and why it is important to consider

The Payout Ratio is computed as the dividend paid to shareholders divided by the net income of the company. It essentially shows how much of the earnings are being distributed to shareholders in the form of dividends. A lower payout ratio is often seen as a positive sign because it indicates that the company is retaining more earnings for growth, reinvestment, or deleveraging. A threshold of 65% is generally considered reasonable as it suggests a healthy balance between rewarding shareholders and keeping funds for other uses.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. The payout ratio, which highlights what proportion of earnings is distributed as dividends, is vital for evaluating dividend sustainability. A lower ratio suggests a dividend is well-covered by earnings, indicating financial stability.

Examining Boeing's data, the dividend coverage ratio ranged from 0.312 to 7.339 between 2003 and 2016, with a general trend that the dividends were well-covered in earlier years. However, from 2017 onwards, the figures were alarming, demonstrating negative earnings not maintaining dividend distribution, reflected in 2020-2023 ratios remaining at 0. This decline in sustainability signals poorer financial health and caution for investors.

Dividends Well Covered by Cash Flow?

This criterion evaluates if Boeing’s dividend payouts are consistently covered by their free cash flow. High coverage shows sustainability of dividends.

The analysis of Boeing's dividend coverage by free cash flow reveals a fluctuating trend. In positive cash flow years such as 2014-2018, coverage ratios around 0.35 indicate relatively healthy coverage, albeit less than ideal, suggesting dividends were mostly funded from operations. Particularly in 2018, Boeing showed strong coverage with 0.291, contributing to confidence in dividend sustainability. However, the years 2019 and 2020 showed stark negative coverage (-1.05 and -0.06 respectively), highlighting operational struggles, compounded by the COVID-19 pandemic hitting the aerospace industry hard, leading to suspending dividends. Despite improved free cash flow in 2022 and 2023, the lack of dividends in recent years signals caution, likely focusing cash flows elsewhere. Overall, past to recent figures imply volatility and caution in relying solely on dividends if cash flow issues reoccur.

Stable Dividends Since the Company Began Paying Dividends?

Checking for stable dividends over the past 20 years is crucial for income-seeking investors because it ensures a steady stream of income.

When analyzing Boeing's dividend payout over the last 20 years, we observe the following values: 0.68, 0.77, 1, 1.2, 1.4, 1.6, 1.68, 1.68, 1.68, 1.76, 1.94, 2.92, 3.64, 5.45, 5.68, 6.84, 8.22, 2.055, 0, 0, 0 per share. The sharp decline occurred from 2019 to 2020, where dividends dropped from 8.22 to 2.055 and then to 0. This drop exceeds the 20% threshold and continued to zero for three consecutive years due to likely operational and financial challenges, potentially influenced by the 737 Max crisis and COVID-19 pandemic. This trend is unfavorable, indicating high volatility and unreliability in the dividend payout.

Dividends Paid for Over 25 Years?

Explain the criterion for Boeing (BA) and why it is important to consider

Analyzing whether Boeing has paid dividends for over 25 years, the data demonstrates consistent dividend payments from 1998 to 2019. A significant drop occurred in 2020, with dividends reaching zero through 2023. Consistent dividend payments over decades signal financial health and commitment to returning value to shareholders. However, the suspension in 2020 substantially impacts Boeing's reputation for reliability in dividends, reflecting potential financial distress or strategic realignments. This trend is negative, dissecting historical consistency disrupted by recent financial challenges.

Reliable Stock Repurchases Over the Past 20 Years?

Examining Boeing's stock repurchase activity over the past 20 years reveals trends in return of capital to shareholders. Consistent buybacks hint at robust cash flow and strong shareholder value enhancement.

Boeing has engaged in consistent stock repurchasing efforts from 2005 to 2019, except for intermittent gaps during tougher years, as seen in 2010-2013 and post-2019, likely due to market disruptions like the 737 MAX crisis and the COVID-19 pandemic. The overall trend showcases a reliable effort at capital return, with a notable average buyback rate reflecting about -1.3834% per year in share reduction. This trend provides favorable insights into the company's prioritization towards enhancing shareholder value through share reductions, although recent trends highlight a shift potentially due to economic constraints.