Last update on 2024-06-27

BOK Financial (BOKF) - Dividend Analysis (Final Score: 4/8)

Analyze BOK Financial's (BOKF) dividend policy performance with an 8-criteria scoring system. Discover stability and growth insights.

Short Analysis - Dividend Score: 4

We're running BOK Financial (BOKF) 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?

Dividend yield refers to the financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is a critical indicator for investors seeking regular income through dividends.

BOK Financial's (BOKF) current dividend yield of 2.5336% is slightly below the industry average of 2.76%. Over the past 20 years, BOKF's dividend yield has fluctuated, peaking at 4.5354% in 2012 and hitting lows of 0% in the early 2000s. The recent yield is consistent with its 20-year average, demonstrating stability but suggesting limited current appeal compared to peers. Additionally, given the stock price volatility, with significant lows and highs, the yield indicates a relatively sustained dividend payout albeit with less attractiveness than the average industry yield. Whether this trend is good or bad depends on whether one prioritizes stability or higher income.

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

The Dividend Growth Rate assesses how much a company's dividend payouts have increased over a specified period. A higher growth rate suggests a company's ability to generate higher earnings.

Over the past 20 years, BOK Financial (BOKF) has demonstrated an average dividend growth rate of approximately 13.54%, well above the 5% threshold. This indicates a strong ability to consistently increase dividends, suggesting financial stability and robust earnings growth. Although there are fluctuations, with notable dips in certain years such as 2022 and 2013, the overall trend is significantly positive. This is undeniably a healthy indicator of the company's commitment to returning value to shareholders.

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

Average Payout Ratio lower than 65% in the last 20 years and why it is significant.

BOK Financial's (BOKF) payout ratio has varied over the past 20 years, with values ranging from 0% to 48.4377%, consistently remaining below the 65% threshold. The average payout ratio over this period stands at approximately 28.12%, which is significantly lower than the 65% benchmark. This suggests prudent dividend management and sustainable payout practices. An average payout ratio below 65% generally implies that the company retains a significant portion of its earnings for reinvestment or other uses, indicating financial stability and potential for growth. Given this trend, BOKF demonstrates a solid track record of maintaining a healthy balance between rewarding shareholders and retaining earnings for future growth.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings ensure the sustainability of dividend payments. This is measured by the Dividend Payout Ratio (dividend per share/earnings per share), where a lower ratio often signifies better coverage.

The analysis of BOK Financial's (BOKF) Dividend Payout Ratio over the years reveals insightful trends. From 2003 to 2010, the Dividend Payout Ratio was generally low, signifying strong coverage with ratios like 0.0998 in 2005 and 0.2689 in 2011. Post-2010, payout ratios have occasionally increased, peaking at 0.4780 in 2012. Consistency returned with ratios between 0.2319 in 2021 and 0.3964 in 2015. Recent trends (approx. 0.2684 in 2023) indicate a good balance, showcasing prudent dividend policies. This trend is positive, indicating dividends by BOK Financial are generally well-covered by earnings, fostering sustainability and potential future growth opportunities.

Dividends Well Covered by Cash Flow?

The criterion assesses if a company's dividends are well-covered by its free cash flow. This measures the company's ability to pay dividends from the cash it generates, which is crucial for sustainability.

Looking at BOK Financial's free cash flow and dividend payout from 2003 to 2023, several trends are notable. Over these two decades, free cash flow has exhibited significant volatility, swinging from negatives in certain years like 2014, 2017, and a massive negative outflow in 2021, to positive spikes such as 2012 and 2022. The coverage ratios reflect these dynamics, with particularly concerning years being those with negative coverage ratios (-3.03 in 2014, -1.21 in 2016, and -0.23 in 2018), indicating that dividends were funded through means other than free cash flow. This can be unsustainable in the long term. However, 2021 and 2022 show a positive shift, especially 2022, with an impressive coverage ratio of 2.16. This suggests a recovery and a potential improvement in the company's cash flow management. Investors should be cautious of the historical volatility but recognize the positive trend in recent years as a good sign.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for BOK Financial (BOKF) and why it is important to consider

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. Stable dividends indicate the company's financial health and reliability in returning value to its shareholders. It's an essential measure, especially for those relying on dividends as a steady income stream.

Dividends Paid for Over 25 Years?

Examining whether a company has paid dividends consistently for over 25 years is critical for dividend-focused investors looking for reliable income streams. It demonstrates long-term financial stability and a shareholder-friendly policy.

BOK Financial has generated dividends for 25 years but with a more reliable track record in the last 17 years since 2006. Before 2005, no dividends were issued. Since then, despite some variability, showing a strong commitment to returning capital to shareholders, which is a good sign of stability and profitability.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the importance of reliable stock repurchases for a company.

BOK Financial (BOKF) has demonstrated a pattern of stock repurchases in several key years: 2009, 2012, 2015, 2016, 2017, 2020, 2021, 2022, and 2023, achieving an average decrease of 4.56% in the number of shares over the past 20 years. This trend typically signals a management prioritization of shareholder returns and an optimistic outlook on the company’s future. Significant repurchases often denote that the company has excess cash, and believes its shares are undervalued, hence representing good value. By reducing the number of shares outstanding, each remaining share represents a larger stake in the company, which can lead to higher earnings per share (EPS) and potentially boost the stock price. The trend of decreasing the number of shares from 66,509,120 in 2003 to 65,651,569 in 2023 is beneficial for existing shareholders, indicating the company's commitment to returning capital to shareholders and enhancing shareholder value.