Last update on 2024-06-27

Carrefour (CAR.DE) - Dividend Analysis (Final Score: 5/8)

Detailed dividend analysis of Carrefour (CAR.DE) using an 8-criteria scoring system. Carrefour scores 5/8, showing strengths in yield and payout ratio.

Short Analysis - Dividend Score: 5

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

The dividend analysis assesses Carrefour's dividend policy using an 8-criteria scoring system. Carrefour scored 5 out of 8. Key insights are as follows: 1. **Dividend Yield:** Carrefour's dividend yield of 3.3776% is higher than the industry average of 2.56%, making it attractive for income-focused investors. However, it’s vital to assess the company's financial health for sustainability. 2. **Dividend Growth Rate:** The average annual dividend growth rate over the last 20 years is inconsistent and volatile, often below a steady 5% growth rate, reducing attractiveness for investors seeking predictable income growth. 3. **Payout Ratio:** Carrefour's average payout ratio is 34.98%, which is well below the 65% benchmark, indicating strong earnings retention for growth. 4. **Earnings Coverage:** Dividend coverage by earnings often falls below 1, particularly in recent years, signifying potential difficulty in maintaining payouts without improving profitability. 5. **Cash Flow Coverage:** The ratio of dividends covered by cash flow has been inconsistent and is below the stable threshold of 1 in recent years, pointing to potential stress. 6. **Dividend Stability:** Carrefour's historical dividends show volatility, with significant drops greater than 20%, highlighting instability. 7. **Dividend History:** Carrefour has been paying dividends for only 15 years, falling short of the desirable 25-year track record. 8. **Stock Repurchases:** Stock repurchases have been inconsistent over the past 20 years, indicating a potentially unstable approach to returning value to shareholders.

Insights for Value Investors Seeking Stable Income

Carrefour's higher-than-average dividend yield and lower payout ratio are attractive aspects. However, its inconsistent dividend growth, erratic earnings and cash flow coverage, and insufficient history of payments and repurchases present concerns. As an investor, it may be wise to proceed with caution. Thoroughly assess Carrefour's financial stability and growth prospects before making a decision. If long-term reliability and dividend consistency are priorities, exploring other companies with more stable and extensive dividend payment histories could be beneficial. Carrefour shows potential but with considerable risks that need to be carefully evaluated.

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?

explain the criterion for Carrefour (CAR.DE) and why it is important to consider

Carrefour's dividend yield currently stands at 3.3776%, which is higher than the industry average of 2.56%. Over the last 20 years, the dividend yield has varied significantly, ranging from lows close to 1% to highs exceeding 6%. In 2023, the yield matches closely with the stock price movements, closing at €16.58. Comparing the industry average over the same period, Carrefour generally performs similarly or better. This higher-than-average yield indicates Carrefour's strong capacity to return value to its shareholders, but it could also indicate a higher risk or a lower stock price. Therefore, while the higher yield is favorable for income-focused investors, it is essential to delve deeper into the company’s financial health, sustainability of dividend payments, and growth potential. Further analysis and scrutiny are needed to determine the long-term feasibility and stability of these yields.

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

The dividend growth rate measures the annualized percentage increase in a company's dividend payments over a specified period, such as 5, 10, or 20 years. A higher growth rate, typically above 5%, is considered a positive indicator of a company's ability to generate growing returns for shareholders, suggesting financial health and operational stability.

Upon analyzing Carrefour's dividend growth rate over the last 20 years, it is evident that the average dividend ratio is 0.8434. However, this figure obscures a highly volatile history. The provided dividend per share ratio data shows significant inconsistencies with extreme values (-50 in 2020 and 108.69 in 2021, for instance). Furthermore, the ratio was even negative in many years such as 2012 (-39.9444) and 2016 (-33.9979). Such erratic dividend performance fails to reflect sustainable or predictable growth. Consequently, although Carrefour has shown some instances of high percentage increases in its dividend payouts, the overall trajectory cannot be classified as stable or consistently above a 5% growth rate. This trend is unfavorable for this criterion, as investors typically look for steady and reliable dividend growth, indicating robust financial management and growth potential.

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

The payout ratio assesses the proportion of earnings a company pays to its shareholders in dividends. A lower payout ratio suggests that the company retains more earnings for future growth, while a higher payout ratio could indicate potential issues in sustaining dividend payments.

From the given data, Carrefour's average payout ratio over the last 20 years stands at 34.98%, significantly below the benchmark of 65%. This average, despite some extreme fluctuations such as negative values in 2017 and 2018, illustrates Carrefour's capability to maintain sustainability in its dividend payments. A lower payout ratio indicates that Carrefour is retaining more of its earnings, which it can reinvest for future growth and mitigating risks. Given that this remains consistently below 65%, this trend is favorable, indicating Carrefour's strategic and disciplined approach to dividend management.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings means that a company generates enough profit to pay its dividends without excessively draining its reserves. It is a sign of financial health and sustainability.

For Carrefour (CAR.DE), examining the earnings per share (EPS) and the dividends per share (DPS) over the past two decades reveals key insights into the company's dividend coverage. The calculated dividend coverage ratio (DPS covered by EPS) offers a deeper perspective. Generally, a ratio above 1 suggests that a company comfortably covers its dividend payouts with its earnings. However, for Carrefour, the coverage ratio falls below 1 quite frequently, especially in recent years. For instance, in 2019, 2020, and 2022, the coverage ratios were 0.322, 0.289, and 0.285, respectively. This trend indicates that Carrefour's earnings were not sufficiently robust to cover its dividend payouts, potentially signaling a financial strain or lower profitability during these periods. Conversely, from 2006 to 2011, the coverage ratio was consistently above 1, showing stronger financial health. The ratio plummeting into negative territory in 2017 and 2018, followed by consistently low figures, suggests that Carrefour may face challenges in maintaining its dividend policy under its current earning capacity. Overall, the recent downward trend in dividend coverage is concerning and highlights the need for attention to Carrefour's earnings stability and growth potential.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow is a criterion that assesses whether a company’s free cash flow is sufficient to cover dividend payments. It is important because it indicates the sustainability of dividend distributions.

When examining the years 2003 to 2023 for Carrefour, we observe that the ratio of dividend covered by cash flow has fluctuated significantly. In 2006, the coverage was exceptionally high at 6.98, likely due to a notably low dividend amount amidst moderate free cash flow. However, years such as 2011 and 2012 present a concerning picture, where free cash flow was negative and hence couldn't cover dividends. More recent years such as 2022 and 2023 show a relatively low coverage at 0.16 and 0.14 respectively, signaling potential stress in maintaining dividend consistency unless cash flow improves. This overall trend raises some red flags regarding the stability of Carrefour’s dividend payments. Sustainable dividend policies generally expect coverage ratios above 1, indicating that Carrefour needs stronger and more consistent free cash flow to ensure robust coverage of dividends. Therefore, the current trend is somewhat negative in terms of dividend coverage by cash flow.

Stable Dividends Since the Company Began Paying Dividends?

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.

The dividend per share values for Carrefour over the last 20 years show some fluctuations. After starting dividend payments in 2008 at €1.08 per share, the dividends remained relatively stable for a few years. However, we observe a significant drop in 2012, where the dividend per share decreased to €0.6486 from €1.08, representing a drop of almost 40%. Although there are other fluctuations, such as the decrease in 2017 to €0.46, which is compensated for by recovery in later years, the presence of such volatility indicates a lack of stability. Investors seeking reliable dividend income may find such inconsistencies concerning, indicating this trend is relatively bad in terms of stability.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years? This criterion assesses whether a company has a consistent history of dividend payments for over a quarter-century. This signifies financial stability and a commitment to returning value to shareholders.

The dataset reveals that Carrefour has paid dividends since 2008. That means the company has been consistently paying dividends for the last 15 years, but it falls short of the 25-year mark needed for this criterion. This indicates that while Carrefour has a recent history of distributing dividends, it does not yet have the long-term track record of 25 years, which would speak strongly for its financial robustness over different economic cycles. A dividend-paying history of 15 years is still commendable but does not fully meet the gold standard expected by risk-averse and income-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Analyzing the reliability of stock repurchases over the past 20 years reveals mixed signals for Carrefour (CAR.DE). Notably, from 2004 to 2011, there was a consistent effort to repurchase shares, highlighting a commitment from the company to increase shareholder value. This is particularly significant as share repurchases can signal management’s confidence in the company's future prospects. However, from 2012 onwards, there have been fewer instances of repurchases, with 2023 notably showing zero shares, indicating potential shifts in strategic financial policies or market conditions at play. The average repurchase rate over this period is -4.8799, demonstrating a general trend towards a reduction in share count, albeit irregularly.