Last update on 2024-06-27

CANCOM (COK.DE) - Dividend Analysis (Final Score: 5/8)

Analyze CANCOM's (COK.DE) dividend policy based on an 8-criteria system, scoring 5 out of 8, detailing its dividend yield, growth, and coverage.

Short Analysis - Dividend Score: 5

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

The dividend analysis of CANCOM (COK.DE) is evaluated using eight criteria focusing on yield, growth rate, payout ratio, coverage by earnings and cash flow, stability, historical payment, and stock repurchases. CANCOM has a high dividend yield compared to the industry average, an impressive annual growth rate, and a payout ratio well below the critical threshold. The dividends are satisfactorily covered by earnings and cash flow, although with some volatility. The company has maintained stable dividends since 2010 but doesn't have a 25-year continuous dividend payment history. Stock repurchases have been irregular, indicating opportunistic rather than systematic buybacks.

Insights for Value Investors Seeking Stable Income

CANCOM (COK.DE) shows strong signs of being a competent dividend payer with a current yield higher than the industry average, impressive growth rates, and a conservative payout ratio. The main concerns are the volatility in earnings and cash flow coverage and the inconsistent history of dividend payments and stock repurchases. Thus, while CANCOM (COK.DE) may be appealing for income-seeking investors due to its high yield and stable payouts since 2010, the absence of a long-term consistent dividend history and irregular buybacks suggest a careful consideration before investing.

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?

Explanation of CANCOM dividend yield in relation to industry average and its relevance.

CANCOM (COK.DE)'s current dividend yield of 3.3829% is significantly higher than the industry average of 1.12%. This is a favorable indicator for investors seeking dividend income. When examining historical data, CANCOM’s dividend yield exhibited volatility, peaking at 4.4477% in 2012. Recent years show an upward trend, reaching 3.3829% in 2023. Compared to the industry, CANCOM consistently outperformed the average, suggesting robust dividend policies and stable financial health. While high yields are attractive, potential investors should also consider yield sustainability and payout ratios.

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

Explain the criterion for CANCOM (COK.DE) and why it is important to consider

The Dividend Growth Rate, or CAGR, indicates how the dividend payout has increased over time. A growth rate higher than 5% over 20 years shows strong company performance and is attractive to investors.

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

Why is it important for CANCOM (COK.DE) to have an average payout ratio lower than 65%?

The average payout ratio for CANCOM over the last 20 years is approximately 33.72%, which is well below the 65% benchmark. This is a positive trend. A lower payout ratio generally signifies that the company is retaining a significant portion of its earnings for reinvestment, which can be crucial for growth, especially in companies within the tech and consulting sectors. The sustainability of dividends is also higher as the company is not overstretching its resources to reward shareholders.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. This criterion is important as it indicates the company's ability to sustain its dividend payouts from its earnings. It ensures that dividend payments are not funded by debt, which could be unsustainable in the long term.

When analyzing CANCOM's dividends being covered by its earnings, we observe fluctuations over the years. From 2003 to 2009, no dividends were paid. Starting in 2010, the dividend cover ratio ranged from 0.25 to 1.17. In years like 2021, the ratio was favorable at 1.17, indicating dividends were well-covered. However, a low ratio in 2021 (0.11) signals potential unsustainability. Overall, while the trend has been positive with some concerning years, CANCOM appears capable of sustaining its dividends from earnings, making this trend cautiously optimistic given potential future earnings volatility.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicate the ability of the company to sustainably pay dividends from its operating profits, ensuring shareholder returns without straining its financial resources.

When analyzing the dividend coverage ratio (dividends covered by cash flow) over the given years, it is essential to understand the ratio is below 1.0 when dividends are not fully covered by free cash flow and above 1.0 when they are. As per the data: 1. The ratio has significant fluctuations—from negative values to over 0.9. In certain years, 2011, 2020, and 2021, there is robust coverage (0.905, 0.615, and 0.739 respectively), indicating sufficient cash flow to cover dividends. Comparatively, years like 2022 and 2023 report moderately healthy coverage (0.514 and 0.514). 2. Negative values in 2006, 2015, and 2023 highlight periods where the company experienced negative free cash flow, struggling to support dividend payouts directly through operating earnings, demonstrating a stress period for the firm. 3. Notably, significant positive free cash flow in 2017 and 2019 doesn't translate directly to substantial dividend growth, underscoring cautious and skewed dividend policies aligning payouts more conservatively rather than capitalizing entirely on cash flow upticks. In sum, CANCOM has mainly managed sustained dividend payments aligning with, though variably, but could exercise greater prudence to anchor higher coverage ratios, steering future payouts towards more consistent thresholds closer to or above 1.0 for stable investor confidence.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are a critical criterion for income-focused investors, as they rely on consistent cash flows from their holdings. Stability in dividend payments over the past 20 years, where the dividend per share has not decreased by more than 20% in any given year, provides assurance of reliable income and reflects positively on the company's financial health and commitment to returning value to shareholders.

Looking at CANCOM's (COK.DE) dividend history over the past 20 years, the company did not pay dividends from 2003 to 2010. However, starting in 2010, the company has shown a stable and increasingly positive trend in its dividends. Since 2011, CANCOM’s dividend per share has not dropped by more than 20%, reflecting a reliable and consistent growth pattern. \nThe dividend increased to €0.15 in 2010 and stayed consistent in the following year, rising gradually to reach €1 per share in recent years. The fact that there were no drops greater than 20% is aligned with the interests of income-seeking investors looking for dependable returns. This trend indicates a robust financial position and ongoing commitment to providing shareholder value, seen in the consistencies and increments in their dividend payouts.

Dividends Paid for Over 25 Years?

Evaluating whether a company has paid dividends for over 25 years helps in assessing its consistency and reliability in returning value to shareholders.

CANCOM (COK.DE) has demonstrated a history of paying dividends over the years, but it has not managed to pay dividends consistently for the past 25 years. From 2001 to 2023, dividends were distributed in many years, but there are notable gaps, particularly from 2002 to 2009. Consequently, while the company has a fairly recent history of consistent dividend payments starting from 2010, it has not met the 25-year mark as of 2023. This incomplete dividend history may raise concerns among investors looking for long-term consistency in dividend payments, although the recent trend shows improvement and reliability. Clearly, a more extended track record would strengthen investor confidence in the company's ability to return value consistently.

Reliable Stock Repurchases Over the Past 20 Years?

Stock repurchases, also known as share buybacks, occur when a company buys its own shares from the marketplace. This is often a sign that the company believes its stock is undervalued and presents a good investment. Regular share repurchases can enhance shareholder value by reducing the number of shares outstanding, potentially boosting dividends per share and earnings per share.

Over the past 20 years, CANCOM (COK.DE) has inconsistently repurchased shares, with significant repurchases only noted in 2009, 2010, 2021, and 2022. The average repurchase rate of 4.5394% indicates a rather sporadic approach. For instance, from 2008 to 2019, there are almost no buybacks, whilst a substantial buyback was noted between 2019 and 2021. This inconsistency suggests that CANCOM may engage in buybacks opportunistically, rather than as part of a regular capital allocation strategy, which can be seen as both good and bad. On the positive side, this might indicate the company only repurchases when it believes the stock is truly undervalued. However, from a long-term investor's perspective, the absence of regular buybacks can be interpreted as a lack of consistent shareholder return strategy.