Last update on 2024-06-27

Capital City Bank Group (CCBG) - Dividend Analysis (Final Score: 3/8)

Analyze Capital City Bank Group's (CCBG) inconsistent dividend performance, rated 3/8, with detailed historical coverage on yield, growth, payout ratios, and more.

Short Analysis - Dividend Score: 3

We're running Capital City Bank Group (CCBG) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Capital City Bank Group (CCBG) was analyzed based on 8 criteria for its dividend policy. Here's the rundown: 1. **Dividend Yield**: CCBG's current yield of 1.2232% is below the industry average of 2.76%. It has shown inconsistency, peaking during the financial crisis but also touching 0% during tough times. 2. **Dividend Growth Rate**: A 20-year period checks if the Dividend Growth Rate is above 5%. Aging multiple economic cycles provides a robust trend. 3. **Payout Ratio**: The ideal payout ratio should be below 65%. CCBG has a negative average of -83.67% due to financial trouble periods, suggesting financial instability. 4. **Earnings Coverage**: High EPS coverage for dividends is key. Lower ratios are ideal. CCBG has had varying results with alarming low coverage in some years. 5. **Cash Flow Coverage**: CCBG needs strong free cash flow to sustain dividends. Analysis shows mixed coverage with periods of strength and significant weakness. 6. **Stable Dividends**: Stability means consistent, less than 20% drops in dividends. CCBG failed to maintain this during crises, including total dividend suspension. 7. **History of Dividend Payments**: Over 25 years of dividend payments show commitment, despite significant variability influenced by economic conditions. 8. **Stock Repurchases**: Consistent buybacks reflect confidence in future earnings and robust cash flow. This summarizes the 8-criteria-based analysis of CCBG's dividend policy and history.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Capital City Bank Group (CCBG) demonstrates mixed results with significant periods of financial instability, inconsistent dividend payments, and dividend yield below industry average. While they've shown resilience and long-term commitment to dividends, the variability and weak cash flow coverage could bother risk-averse, dividend-focused investors. Therefore, it may be worth researching CCBG further before investing heavily if you're an income-seeking investor or going for stable dividends.

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 represents the dividend income investors receive for every dollar invested in a stock. It is a critical metric for income-focused investors, as it indicates the return on investment from dividends. A higher dividend yield suggests higher income potential, but it could also be a sign of underlying issues if the stock price is declining.

For Capital City Bank Group (CCBG), the current dividend yield of 1.2232% is notably lower than the industry average of 2.76%. Historically, CCBG's dividend yield has varied significantly, peaking at 5.4913% in 2009 during the financial crisis—a common time for defensive stocks to be more attractive. However, the yield dropped to 0% from 2012 to 2014, indicating a period when the company might have suspended dividends, possibly due to financial strains or reallocation of capital to growth initiatives. These fluctuations suggest that while CCBG's dividend yield has the potential for higher returns, it has been comparatively inconsistent and lower than the industry average in recent years. The current trend is not favorable for income investors.

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

What is the Dividend Growth Rate and why is it important to use a 20 years for the analysis? Please be more specific.

The Dividend Growth Rate (DGR) represents the annualized percentage rate of growth that a given stock's dividend undergoes over a period. A 20-year period provides a comprehensive view as it encompasses various market cycles and economic conditions, ensuring a more robust and less volatile insight into the dividend's growth trend.

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

The Average Payout Ratio is crucial as it shows the percentage of earnings paid to shareholders in dividends. A payout ratio lower than 65% suggests a company is reinvesting sufficiently back into its business.

The average payout ratio for Capital City Bank Group over the last 20 years is -83.67%. This negative value is concerning and mainly due to extremely high negative payout ratios in 2009 and 2010, when the company faced significant losses, paying no dividends or unsustainably high dividends relative to negative earnings. Even ignoring these aberrations, multiple years saw payout ratios above 65%, undermining the stability of the firm's dividend policy. Therefore, this trend is not favorable, indicating periods of financial stress and inconsistent returns to shareholders.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings and why it is important to consider

Earnings per share (EPS) is a crucial metric for understanding how well a company can cover its dividend payments. If the ratio of dividends per share to earnings per share is high, it indicates that the company is using a significant portion of its earnings to pay dividends. This can be a riskier proposition because it leaves less money for reinvestment in the business or for a financial cushion. Conversely, a lower ratio signifies that the dividends are well covered by the company’s earnings, suggesting financial stability and a lower likelihood of dividend cuts.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicates a company's ability to sustain its dividend payouts using the cash generated from operations. It ensures financial stability.

Examining the data, Capital City Bank Group (CCBG) exhibits varying coverage ratios for dividends using free cash flow over the years. Notably, in years like 2003 (32%), 2004 (26%), 2005 (44%), and 2006 (46%), the company demonstrated decent coverage. However, periods such as 2009 (12%), 2010 (8%), and particularly 2019 with even a negative free cash flow significantly below the coverage line, are alarming. Years where the ratio is below 1 indicate risks, especially when the ratio drops drastically as seen in 2010 with zero dividends paid. More recent years (2020-2023) show improved but fluctuating ratios. The consistency in maintaining dividend payout illustrates the company's resolved foundation but fluctuating free cash flow can be a risk. Overall, the trend showcases periods of strength and considerable vulnerability, indicating the necessity for careful monitoring post-periods of weak 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.

Examining the past 20 years of dividend data for Capital City Bank Group (CCBG), we observe that the dividend per share has shown variability, particularly during and after the Global Financial Crisis (2008-2010), where the dividend was significantly reduced and even suspended in 2011 and 2012. This inconsistency is a critical point for income-seeking investors. The dividend per share dramatically dropped to zero in 2011 and 2012, and again the 2023 dividend per share is lower compared to prior years. Even though there has been a recovery post-2012, with dividends climbing back to $0.66 in 2022, the payments still lack consistency. This trend is unfavorable for those seeking stable and predictable dividend income.

Dividends Paid for Over 25 Years?

Investors seek companies with a long history of dividend payments, as it reflects financial stability and a commitment to returning value to shareholders.

Capital City Bank Group (CCBG) has paid dividends for over 25 years, reflecting a commendable history of returning value to shareholders. However, the consistency and amount have fluctuated. For example, from 1998 to 2008, the dividend per share grew from $0.3916 to $0.745. However, the global financial crisis saw dividends drop sharply in 2010 to $0.49, suspending completely in 2012 and 2013 before recommencing in 2014. This shows resilience and recovery, ultimately rebounding to $0.66 per share in 2022 before a slight drop to $0.36 in 2023. Hence, while the commitment to dividends is solid, the variability may be a point of concern for dividend-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Capital City Bank Group (CCBG) and why it is important to consider

Stock repurchases (buybacks) are a method through which companies return capital to shareholders, potentially enhancing shareholder value by reducing the number of shares outstanding, thereby increasing earnings per share (EPS). Consistent and reliable stock repurchases over a prolonged period signify the company's confidence in its future earnings, strong cash flow, and a shareholder-friendly management approach.