Last update on 2024-06-27

Big 5 Sporting Goods (BGFV) - Dividend Analysis (Final Score: 4/8)

Uncover Big 5 Sporting Goods (BGFV) dividend analysis with insights on performance and stability. Final score: 4/8 criteria met.

Short Analysis - Dividend Score: 4

We're running Big 5 Sporting Goods (BGFV) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Big 5 Sporting Goods’ (BGFV) dividend policy was assessed using an 8-criteria system, scoring a 4. Here's what was found: 1. **Dividend Yield**: High at 7.8864%, much above the industry average of 1.21%, although very unstable over 20 years which might hint at stock price issues. 2. **Average Annual Growth Rate**: Higher than 5% but very erratic, with percentages swinging drastically—pointing to unsustainable growth. 3. **Payout Ratio**: Average payout ratio of under 65% was checked, indicating ability or inability to reinvest for business growth. 4. **Earnings Coverage**: Dividends' earnings covers varied with periods of low and negative coverage, suggesting risks in maintaining dividend levels. 5. **Cash Flow Coverage**: Fluctuated substantially, showing potential problems in ensuring dividend payout from operating cash flow consistently. 6. **Dividend Stability**: Unstable dividends noted, with drops greater than 20% at times, which raises doubts among income-focused investors. 7. **Dividend Duration**: Around 20 years of dividend payments but not meeting the over 25 years reliable indicator. 8. **Stock Repurchases**: Situational analysis wasn’t specifically specified but is an important indicator owing to highlighting company's belief in its stock value.

Insights for Value Investors Seeking Stable Income

Big 5 Sporting Goods (BGFV) shows potential with high yields and commitment to returning shareholder value. However, the unstable growth rates, erratic dividend performance, and low earnings coverage spell risk, especially for those seeking steady income. While it doesn't meet the gold standard of 25-year dividends, BGFV has delivered for about 20 years. As an investor, this stock might be appealing if you are comfortable with volatility and not relying on dividends for regular income. Otherwise, it may be safer to look elsewhere for more stability.

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 and why it is important to consider

A high dividend yield can indicate that a company generates sufficient income for payouts, attracting income-focused investors. Big 5 Sporting Goods (BGFV) sporting a 7.8864% yield against the modest industry average of 1.21% is noteworthy. The 20-year trend shows fluctuations, peaking in 2018 at 19.305%. Comparing the dividend yield from 2019 (6.6667%) to the latest 2023 yield shows a growth, although instability is present. The significantly elevated yield reflects higher payouts but may also hint at stock price depreciation.

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

The Dividend Growth Rate is higher than 5% in the last 20 years

The average dividend ratio is approximately 60.83%, which suggests substantial volatility in dividends over the years with values ranging from -64.66% to 1032%. Sharp increases, such as 1032% in 2021, and significant decreases justify this high average. The growth rate is erratic rather than consistently above 5%. This trend is generally negative because sustainable growth is preferred over volatile performance. Hence, the dividends have not stabilized above a reasonable growth threshold when taken as a whole over 20 years.

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

Explain the criterion for Big 5 Sporting Goods (BGFV) and why it is important to consider

A consistently low payout ratio indicates a company's ability to sustain its dividend payments. The criterion here is an average payout ratio of less than 65% over the past 20 years, which suggests that the company retains a considerable portion of its earnings to reinvest into the business, fostering growth and stability.

Dividends Well Covered by Earnings?

Dividends must be covered consistently by the company's earnings, ensuring that the company can sustain paying dividends without jeopardizing its financial stability.

Analyzing Big 5 Sporting Goods' (BGFV) earnings per share (EPS) compared to its dividend per share (DPS) from 2003 to 2023, we observe fluctuations in the ratio of dividends covered by EPS. Key points include particularly low coverage ratios in 2013 and negative ones in 2017 and 2023, indicating times when earnings were insufficient to cover dividends. This inconsistency hints at possible financial instability in maintaining a high dividend payout, which is concerning for long-term dividend sustainability. Peaks in 2016, 2018, and notably negative years show with volatility. Therefore, the trend of EPS covering DPS, on average, does suggest concerns regarding consistent future dividend payments. This tentative to avergare balance dampens confident forecasts in their discernible extreme fluctuations, depicting a mixed bag for investors.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow (often referred to as Dividend Coverage Ratio) is critical as it indicates a company’s ability to pay and sustain its dividend payouts from its operating cash flow. High coverage ratio signifies strong financial health and stable dividends.

Analyzing the dividend covered by cash flow data of Big 5 Sporting Goods (BGFV) reveals a fluctuating trend. For example, in 2013, the ratio was 2.07, indicating that the company's free cash flow was more than double the dividend payout. However, years with negative figures, such as 2011 (-0.61) and 2022 (-0.54), indicate times when cash flow was insufficient to cover dividends, posing concerns for dividend sustainability. The data shows improvement and downturns, with notable strengths in 2023 (2.63) suggesting a current robust ability to cover dividends with cash flow.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, particularly 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. It ensures a steady income stream and reflects the company's ability to generate consistent profit, which is essential for investors who rely on these payments for living expenses or reinvestment.

An analysis of dividend per share for Big 5 Sporting Goods (BGFV) over the last 20 years reveals significant fluctuations. Specifically, the dividend per share dropped by more than 20% on several occasions: 2008 to 2009 (from $0.36 to $0.20), 2019 to 2020 (from $0.20 to $0.25), and a notable increase from 2020 to 2021 (from $0.25 to $2.83). These drops suggest a lack of stability, which can be concerning for income-seeking investors. On the positive side, despite these fluctuations, there's also been substantial growth, particularly in the last few years with a peak of $2.83 in 2022. This mixed trend indicates that while there are periods of instability, the company also shows potential for significant dividend growth. However, for those prioritizing consistent income, these variations might present a risk that needs to be considered carefully.

Dividends Paid for Over 25 Years?

Dividends paid for over 25 years is a measure of a company's stability and shareholder commitment. Consistent dividends indicate strong financial health and reliable income for investors.

Big 5 Sporting Goods (BGFV) has not been paying dividends for over 25 years as it only started paying dividends in 2004. Despite not meeting this criterion, the company has shown a strong commitment to its shareholders by paying dividends for almost 20 years. This signals financial stability and a positive trend towards shareholder returns. However, the fluctuation in dividends, particularly the significant increase to $2.83 in 2021 and the subsequent drop to $0.5 in 2023, could indicate variability in earnings or a strategic shift in financial management decisions. Overall, while the lack of a 25-year history is a downside, the recent dividend trends suggest a generally positive but somewhat unstable dividend policy.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Big 5 Sporting Goods (BGFV) and why it is important to consider

Share repurchases are an important indicator of shareholder value as they imply that the company believes its own stock is undervalued. This could also indicate strong free cash flow allowing value to be returned to shareholders. Evaluating the consistency and frequency of repurchase programs over the past 20 years offers insight into the company's financial health and management's confidence in the business. Furthermore, reliable repurchases can signal market sentiment and are a positive indicator for dividend stability and growth.