Last update on 2024-06-27

Hugo Boss (BOSS.DE) - Dividend Analysis (Final Score: 6/8)

Analyze Hugo Boss (BOSS.DE) dividend performance with a score of 6 out of 8 based on an 8-criteria system, highlighting financial stability and growth potential.

Short Analysis - Dividend Score: 6

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

The analysis evaluates Hugo Boss (BOSS.DE) using an 8-criteria dividend scoring system, resulting in a score of 6. Hugo Boss's dividend yield is currently 1.4824%, below the industry average of 2.3%, and has fluctuated significantly over the years, indicating instability. Nevertheless, the company's average annual payout ratio of 40.65% over 20 years is positive. However, dividend to earnings coverage has concerns, as there have been years where the company failed to cover dividends with its earnings. Similarly, the coverage from cash flow has shown inconsistency. On the brighter side, Hugo Boss has consistently paid dividends over 20+ years, though fluctuating in value. Stock repurchases are minimal and not reliable over the analyzed period, which might not please some investors.

Insights for Value Investors Seeking Stable Income

Based on the analysis, investing in Hugo Boss (BOSS.DE) might be approached with caution. While the company has a good history of paying dividends and a relatively low payout ratio, the frequent fluctuations in dividend yield and the inconsistent coverage by earnings and cash flow could be potential red flags for someone looking for stable income. If you prioritize steady and reliable dividends, this stock might pose some risks, and further detailed research and consideration would be wise before making an investment.

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 demonstrates how much a company pays in dividends each year relative to its share price.

Hugo Boss (BOSS.DE) currently has a dividend yield of 1.4824%, which is lower than the industry average of 2.3%. This could be viewed negatively by investors seeking dividend income, particularly since Hugo Boss’s own yield has decreased significantly from much higher percentages in prior years like 2008 (8.3815%) and 2016 (6.2274%). Moreover, the company's dividend yield is quite volatile, as evidenced by fluctuations from a high of 10.2235% in 2020 to a low of 0.0748% in 2021. Such inconsistency may cast doubts on the company's dividend strategy and reliability, which could concern potential investors looking for steady income.

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

Discuss the importance of a stable dividend growth rate over a long period. Explain how it reflects the company's financial health and long-term commitment to returning value to shareholders.

The analysis reveals the following trends in Hugo Boss's dividend per share ratio over a period of 20 years: Dividend Ratio: [0, 4, 7.6923, 19.0476, 19, 21.8487, -5.5172, -29.927, 110.4167, 42.5743, 8.3333, 7.0513, 8.3832, 0, -28.1768, 1.9231, 1.8868, 3.3333, -98.5663, 1650, 42.8571] The average dividend ratio stands at 85.1%. However, significant fluctuations over the years are evident, with peaks of 1650% in 2022 and troughs of -98.57% in 2021. Such volatility indicates an unstable dividend policy, which may raise concerns about consistency and reliability. Despite a high average growth rate, the erratic pattern might undermine investor confidence. Achieving a stable annual growth rate above 5% would offer stronger assurance of sustainable financial health.

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

The payout ratio indicates the proportion of earnings a company pays to its shareholders in the form of dividends. A lower ratio indicates more retained earnings for growth, which generally implies potential for future profitability and stability.

The average payout ratio for Hugo Boss over the last 20 years stands at approximately 40.65%. This is well below the 65% threshold, which generally implies a healthy balance between rewarding shareholders and retaining earnings for growth. However, there have been some years, particularly 2008, 2009, 2014, 2015, 2016, 2017, and 2018, where the payout ratio has significantly exceeded this threshold, peaking in 2014 with a ratio of 129.11%. Such peaks may reflect exceptional circumstances such as strong earnings years or unique payout policies. Despite these outliers, maintaining an average payout ratio below 65% over two decades is a positive indicator of Hugo Boss's ability to manage its dividend policy effectively within sustainable limits.

Dividends Well Covered by Earnings?

Assessing whether dividends are well covered by earnings involves comparing the earnings per share to the dividend per share. A high coverage ratio indicates financial stability.

Hugo Boss (BOSS.DE) presents a mixed picture regarding its dividend coverage by earnings per share (EPS) over the past two decades. The ideal scenario is to have a dividend coverage ratio (DCR) of more than 1, which signifies that the company generates enough earnings to cover its dividend payouts comfortably. However, the values for Hugo Boss have varied significantly. Notably, during some periods, especially in 2020, the DCR was severely low (-0.877), which indicates that the company faced considerable difficulties covering its dividends. The most recent year (2023) also reveals a worrying trend as the DCR is zero, signaling that the earnings are failing to cover the dividends entirely. On the positive side, there were years where the DCR surpassed 1, suggesting strong financial health and the capacity to sustain dividend payouts. Investors would be cautious, however, due to the inconsistency, but might find reassurances in the positive years. Overall, the trend indicates room for stability improvements and potentially raises concerns about the predictability of dividend sustainability.

Dividends Well Covered by Cash Flow?

Why 'Dividends Well Covered by Cash Flow' is an important criterion when evaluating a company's dividend quality.

A company's ability to cover its dividends with free cash flow indicates financial health and stability. It demonstrates that the firm generates enough cash to not only support its operational needs but also sustain dividend payments, making the dividends more reliable and less risky for investors.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Hugo Boss (BOSS.DE) and why it is important to consider

The stability of a company's dividend payments over an extended period is essential for income-seeking investors. It offers insight into the company's financial health, management's commitment to returning value to shareholders, and reduces uncertainty for investors who depend on this income. A stable or growing dividend trend suggests that the company has a robust and resilient business model.

Dividends Paid for Over 25 Years?

The criterion evaluates if a company has consistently paid dividends for over 25 years. This reflects long-term financial stability and shareholder-friendly policies, reassuring investors of sustained returns.

Analyzing the data from 2000 to 2023, Hugo Boss (BOSS.DE) has consistently paid dividends every year except for 2001, when no dividend was paid. This illustrates a good record of returning capital to shareholders, supporting its attractiveness to income-focused investors. Although the dividends per share have fluctuated, ranging from as low as €0.04 in 2021 to as high as €4 in 2000, the general resilience over more than two decades signifies a healthy dividend policy. This trend is positive as it demonstrates Hugo Boss’s capability to provide shareholder value over a prolonged period, notwithstanding economic cycles and market conditions.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company's commitment to returning value to shareholders and managing share dilution.

Over the past 20 years, Hugo Boss (BOSS.DE) has shown minimal stock repurchase activity, with significant repurchases only in 2004 and 2023. Most notably, the number of shares outstanding remained constant at 69,016,167 over several years, suggesting limited repurchasing strategies. An average repurchase trend of -2.7791 implies a slight contraction in shares. This sporadic repurchase activity could indicate inconsistency in capital return strategies. This trend may not be favorable if shareholders expect regular buybacks as part of a value return approach.