Last update on 2024-06-27

Comcast (CMCSA) - Dividend Analysis (Final Score: 5/8)

Analyze Comcast (CMCSA) dividend performance with a comprehensive 8-criteria system. Final score: 5/8. Discover yield, coverage, growth, payout ratio & more.

Short Analysis - Dividend Score: 5

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

The dividend analysis for Comcast (CMCSA) uses an 8-criteria scoring system to assess the company's dividend policy's performance and stability. Based on the criteria, Comcast scores 5/8, highlighting strengths and areas for improvement. Here's a breakdown: 1. **Dividend Yield**: Comcast’s current yield is 2.5998%, below the industry average of 3.56%. Despite periodic increases, it indicates a relatively higher-priced stock or lower dividend payments. 2. **Dividend Growth Rate**: Averaging 15.99% over 20 years, Comcast’s growth rate is high, showing strong dividend growth potential despite some volatility. 3. **Payout Ratio**: Comcast’s average payout ratio is 24.3%, well under the 65% mark, signalling a sustainable policy. 4. **Earnings Coverage**: Mostly yes, but inconsistent coverage across the years suggests occasional dips in stability. 5. **Cash Flow Coverage**: Yes, a strong upward trend in free cash flow adequately covers dividends, indicating potential for future growth. 6. **Stable Dividends**: The assessment of stable dividends over 20 years is missing, so hard to conclude. 7. **Consistent Payouts**: Since 2010, Comcast has paid consistent dividends though it missed dividends in the previous decade, signalling both growth and some past instability. 8. **Stock Repurchases**: Consistently strong, showing robust financial health with significant share buybacks, particularly prominent since 2013.

Insights for Value Investors Seeking Stable Income

Comcast shows several strong points, particularly in dividend growth, payout ratio, and share repurchases. However, its lower-than-industry-average yield and inconsistent dividend payouts in earlier years might concern some investors. The company's solid cash flow coverage and recent consistent payouts highlight potential for continued growth and stability. Investors looking for a stable and growing dividend-paying stock might find Comcast appealing, but should consider the historical volatility and closely monitor future performance.

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 measures the dividend income investors receive in relation to the stock price. Yield above the industry average typically implies a strong dividend-paying capability but could also indicate a depressed stock price. Understanding industry norms helps to benchmark performance.

Comcast's current dividend yield is 2.5998%, trailing the industry average of 3.56%. Historically, the firm's yield has fluctuated, starting from 0% until 2007 and reaching peaks above the industry average in individual years like 2022 (3.0312%). However, the below-industry yield may hint that Comcast's stock is priced relatively higher compared to its peers, or it could indicate slightly lower dividend payments. Notably, Comcast's stock price has seen significant appreciation from $10.93 in 2003 to $43.85 in 2023, suggesting that despite lower yields, there has been value accumulation in stock price itself. This trend, marked by periodic yield increases, signifies ongoing growth in dividend payouts.

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

Dividend growth rate is crucial as it demonstrates the company's capability to consistently increase its payments to shareholders. A high growth rate often reflects financial stability and management's confidence in the company's ongoing profitability.

The dividend growth rate for Comcast over the last 20 years shows significant variability. Despite negative values in certain years like 2014 (-13.4615) and 2018 (-31.3725), the average dividend growth rate stands at approximately 15.99%, which is well above the 5% benchmark. This indicates a generally strong ability to grow dividends, though the volatility hints at potential periods of instability or aggressive adjustments. Overall, the trend is positive for this criterion.

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

The average payout ratio indicates the percentage of earnings a company pays to its shareholders in the form of dividends. A ratio below 65% is often considered a sign of a sustainable dividend.

From 2003 to 2023, Comcast's payout ratio has varied considerably, but the average stands at 24.3%, well below the threshold of 65%. This trend is favorable as it suggests that Comcast maintains a sustainable dividend policy. Despite some fluctuations, notably in 2022 when the payout ratio peaked at 83.3%, the overall low average indicates prudent financial management and capacity for future dividend growth.

Dividends Well Covered by Earnings?

Dividends should be well covered by earnings to ensure financial stability. This means the company's earnings are sufficient to cover its dividend payments.

Analyzing Comcast's Earnings Per Share (EPS) and Dividend Per Share (DPS) from 2003 to 2023, we observe that, in many years, the earnings sufficiently cover the dividends. For instance, in 2022, the EPS was 1.2725 while the DPS was 1.06, giving a coverage ratio of 0.833. This trend is fairly consistent but shows occasional dips. In 2019, EPS was significantly higher at 2.8678 with a DPS of 0.63, yielding a robust coverage ratio of 3.91. Still, in 2017, despite an EPS of 4.7459, the coverage dropped substantially to 0.1. This indicates volatility in coverage, suggesting the need for vigilant monitoring by investors. Generally, the high coverage ratios are reassuring, but the inconsistency can be a concern.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that the company's free cash flow is sufficient to cover its dividend payouts, which is important for ensuring sustainability of dividends.

Comcast's free cash flow over the years indicates a strong upward trend, starting from a negative $1.307 billion in 2003 to rising over $12.96 billion in 2023. Meanwhile, the dividend payout amounts escalated from zero in 2003 to $4.766 billion in 2023. Evaluating the dividend coverage by free cash flow, we see that it increased from 0% (as dividends were non-existent) to a peak ratio of 36.71% in 2023. This indicates a positive trend: a higher coverage ratio over time shows that Comcast has been generating significantly more cash flow relative to its dividend obligations. The trend can be considered good regarding the criterion indicating Comcast's capacity to not just sustain but potentially increase dividend payouts in the future.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Comcast (CMCSA) and why it is important to consider

Stable dividends over the past 20 years are critical for income-seeking investors because they desire reliability in their returns. Sudden drops in dividend payments can signify financial instability within the company, which can be a red flag for investors reliant on this income. By assessing whether the dividend per share has not decreased by more than 20% in any year during this duration, we can confirm the resilience and reliability of Comcast's dividend policy.

Dividends Paid for Over 25 Years?

For a company to be considered reliable in paying dividends, one important measure is whether it has paid dividends consistently for over 25 years.

Comcast (CMCSA) has indeed paid dividends consistently over a noticeable part of the past 25 years. Starting from a small dividend per share of $0.0147 in 1998, the company did not pay dividends from 2000 to 2009. Since 2010, Comcast has been consistent with its dividends, increasing them almost annually up to $1.14 per share in 2023. While Comcast has only been consistent in its dividend payments for 13 years (from 2010 onwards), this growing trend is a good sign for investors. However, the lack of dividends for an entire decade previously may be a red flag for those seeking a long history of payouts. Nonetheless, its recent consistency and growth are positive.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years reflect a company’s consistent ability to buy back its own shares, an indicator of financial strength and confidence.

Over the past 20 years, Comcast has shown a commitment to repurchasing shares, as evidenced by the data. The total number of shares has decreased from approximately 10.1 billion in 2003 to around 3.98 billion in 2023, indicating a substantial reduction. Notably, there were 16 years within this period where notable buybacks were recorded, with the most significant reductions occurring in 2006, 2008, and from 2013 to 2023. A consistent average repurchase rate of -4.1866% per annum highlights Comcast's ongoing ability to return capital to shareholders through buybacks. This trend is favorable as it signifies robust financial health and management’s confidence in the company’s future prospects.