Last update on 2024-06-27

Banner (BANR) - Dividend Analysis (Final Score: 5/8)

Analyze Banner (BANR)'s dividend stability and performance over 20 years, scored 5/8. Learn if BANR's dividends meet your investment needs in 2023.

Short Analysis - Dividend Score: 5

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

The dividend analysis for Banner (BANR) evaluates its dividend policy using eight criteria. Banner's dividend yield is below the industry average, showing inconsistency over the years. Their dividend growth rate over 20 years is volatile, not meeting the 5% benchmark reliably. Payout ratios often exceed the 65% guideline but show some recent improvement. Dividends are generally covered by earnings and cash flow with notable fluctuations. Dividend payments have been unstable, with significant drops, especially during financial crises. While dividend payments have been made for over 25 years, the instability and volatility are concerning. The company's stock repurchase history is not consistently highlighted, which is a point for further evaluation.

Insights for Value Investors Seeking Stable Income

Given the mixed results, with serious concerns about stability and consistency in several areas, cautious investors might want to think twice before investing heavily in Banner (BANR) for dividend income. The stock demonstrates high volatility and inconsistency, which might be risky for those seeking stable and predictable returns. Further research and consideration of risk tolerance are recommended.

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 financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is important for investors as it indicates how much income they can expect to receive from owning the stock.

Banner's current dividend yield of 1.7924% is lower than the industry average of 2.76%. Examining the historical data, Banner had higher yields in certain years, such as 5.3135% in 2008 and 5.6665% in 2020, significantly surpassing the industry average. However, there are also periods like 2012 and 2011 where the yield was notably low at 0.1302% and 0.9329%, respectively. The variability indicates inconsistency in dividend payouts, which can be concerning for income-focused investors. In recent years, the dividend yield has not kept pace with the industry, reflecting either an elevated stock price or lower dividend payouts. Investors must consider whether they seek stable income or are comfortable with the fluctuations demonstrated by Banner over the long term.

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

The Dividend Growth Rate refers to the annualized percentage rate of growth that a stock's dividend undergoes over a period. A growth rate higher than 5% over 20 years indicates a company’s strong ability to consistently grow its cash flow and returns to shareholders.

From the provided "Dividend Ratio" data, it is evident that the figures are highly inconsistent, with significant fluctuations between positive and negative growth rates over the years. While there are substantial peak growth years such as 2004, 2013, 2017, and 2020 with notable high percentages like 1575% in 2013, many other years experienced drastic downturns, especially during economic downturns like 2008 (-35.0649%) and 2009 (-94%). The average dividend ratio stands at approximately 74.5%, which considerably exceeds the 5% benchmark. However, due to the volatility and unpredictability demonstrated in the annual growth rates rather than exhibiting stable and robust growth, it is difficult to conclude that Banner (BANR) has a reliable and consistent dividend growth rate exceeding 5% in a healthy investment perspective. Such inconsistency can often be risky for conservative investors. The overall trend may be seen as bad since predictable and steady growth is typically valued higher than volatile spikes and plunges.

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

Explain the criterion for Banner (BANR) and why it is important to consider

The Average Payout Ratio of a company is an essential metric to evaluate. It indicates the proportion of earnings a company is returning to its shareholders in the form of dividends. A payout ratio of 65% or lower is often deemed sustainable, ensuring the company retains enough for growth and operations.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings means that a company generates enough profit to comfortably pay out dividends to its shareholders. This is measured by the payout ratio, which compares dividends per share to earnings per share. A lower payout ratio indicates more reliable future dividends and potentially more room for growth.

Upon examining Banner's (BANR) financial data from 2003 to 2023, we observe a concerning trend. In well-performing years such as 2006, 2007, 2016, 2018, and 2020, the payout ratio was relatively low (below 0.5), indicating healthy coverage of dividends by earnings. However, there are alarming instances, particularly in 2008 and 2009, with negative earnings per share and very high payout ratios, showing that the company faced serious financial challenges. What stands out is the volatile nature of Banner's earnings, seen in the drastic fluctuations in both earnings per share and payout ratios over the years. For instance, the payout ratio soared above 1 in 2017, and it was nearly negligible in 2012 at 0.012. The general trend heading into 2023, with a low ratio, indicates a potential for stable dividend payments if the current earnings level persists. Nonetheless, the historic volatility warrants caution for investors.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow refers to a situation where a company's free cash flow (FCF) is sufficient to pay its dividend obligations. This indicates financial stability and sustainability.

From 2003 to 2023, Banner (BANR) has had diverse coverage of dividends by its free cash flow, ranging from as low as -1.98 in 2008 to a high of 7.71 in 2018. Several years, such as 2008 and 2016, show negative and extremely modest coverage, highlighting potential periods of financial distress or heavy capital expenditure. Encouragingly, most recent years demonstrate a positive trend, with ratios above 0.2. Given the recent values closer to or above 1, such as in 2020 (0.84) and 2021 (0.19), the dividend seems reasonably well-covered by cash flow, offering a mixed but cautiously optimistic outlook.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments is crucial for income-seeking investors because it provides a reliable stream of income. A drop of more than 20% can significantly affect the income expectations.

Over the past 20 years, Banner (BANR) experienced a significant drop in dividend payments, especially during the financial crisis in 2008-2009, where the dividend per share dropped from $3.5 to $0.21 in 2009, a drop of over 94%. Although they have somewhat recovered over the years, such sharp declines mark a notable instability. This trend is concerning for income-seeking investors who prioritize consistent dividend income.

Dividends Paid for Over 25 Years?

Explain the criterion for Banner (BANR) and why it is important to consider

The criterion focuses on whether Banner (BANR) has consistently paid dividends for over 25 years. This track record is crucial, as it speaks volumes about the company’s stability and commitment to returning value to its shareholders. A long and consistent dividend payment history often indicates a company's strong financial health and prudent management.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Banner (BANR) and why it is important to consider

The assessment of reliable stock repurchases evaluates how consistently Banner (BANR) has committed to repurchasing its own shares over an extended period. This criterion is crucial because consistent repurchase activities can enhance shareholder value by decreasing the number of outstanding shares, thereby increasing earnings per share (EPS) and signaling management's confidence in the company's valuation.