Last update on 2024-06-27

CEWE Stiftung (CWC.DE) - Dividend Analysis (Final Score: 5/8)

Analyze CEWE Stiftung (CWC.DE) dividends with an 8-criteria scoring system. Final score: 5/8. Discover performance, stability, and investor potential for 2023.

Short Analysis - Dividend Score: 5

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

The dividend analysis evaluated CEWE Stiftung (CWC.DE) using 8 key criteria including dividend yield, growth rate, payout ratio, coverage by earnings and cash flow, stability, and repurchase history. CEWE Stiftung shows a higher-than-average dividend yield at 2.4209%, and a growth rate surpassing 5% on average, despite fluctuations. However, the 20-year average payout ratio of 70.92% exceeds the favorable threshold of 65%, hinting at potential sustainability issues. Earnings and cash flow coverage ratios indicate recent struggles, with ratios sitting below 1 in some recent years. Despite variability, dividends have been stable over the past 20 years without major drops, paid out for over 25 years, and share repurchase activities have been observed intermittently over the last two decades.

Insights for Value Investors Seeking Stable Income

Considering the high yield and strong historical commitment to dividends, CEWE Stiftung could be appealing to dividend-focused investors. However, concerns over payout sustainability and fluctuating coverage ratios suggest careful monitoring is necessary. For conservative investors prioritizing consistent returns and stability, there may be better options. For those willing to accept some risk for higher yields, CEWE Stiftung remains a viable consideration but requires due diligence.

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 shows how much a company pays out in dividends each year relative to its stock price. It is an important indicator for investors, particularly those seeking income, as it shows the return on investment from dividends alone.

CEWE Stiftung's current dividend yield of 2.4209% is significantly higher than the industry average of 1.32%. Over the last 20 years, CEWE's dividend yield has seen substantial variation, hitting a peak of 8.5409% in 2008 and a low of 1.451% in 2005. On average, CEWE's dividend yield tends to be higher than the industry average, except during years when the stock price has surged, like in 2004 and 2005, reflecting a strong overall return for investors seeking income. The current trend of a higher-than-average yield is a positive indicator, positioning CEWE as a potentially attractive option for dividend-focused investors.

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

The Dividend Growth Rate is a critical measure that indicates how much a company's dividend payments have increased over a certain period. A growth rate higher than 5% can signal a healthy and progressively growing company, which is attractive to dividend investors.

The provided data for CEWE Stiftung (CWC.DE) between 2003 and 2023 shows a mixed trend in dividend growth. The Dividend Per Share Ratio fluctuates significantly year-over-year, with some years experiencing substantial growth (e.g., 2006 with 100% and 2020 with 105.1282%) and other years witnessing declines (e.g., 2004 with -20% and 2021 with -42.5%). Despite these ups and downs, the average dividend ratio over the 20 years stands at approximately 9.65%, which is higher than the 5% threshold. However, the volatility in growth rates may indicate instability or inconsistent dividend policy. This trend gives a mixed signal: while achieving an overall satisfactory growth rate, the erratic annual changes may concern risk-averse investors who seek predictability in dividend income.

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 payout ratio suggests that a company can sustain its dividend payouts over the long term, making an average payout ratio under 65% generally favorable.

The 20-year average payout ratio for CEWE Stiftung is 70.92%, which is above the desired threshold of 65%. This result is indicative of a higher reliance on earnings for dividend payments, limiting the company’s ability to retain earnings for reinvestment. Particularly in the early years (2003-2005 and 2008-2009), the payout ratio significantly exceeded this threshold, impacting the overall average. The years 2010 onward show a more controlled and sustainable payout ratio, often below 50%, showcasing a positive trend in their financial discipline. Despite these improvements in recent years, the high average over the past two decades indicates potential vulnerability in maintaining dividend sustainability, especially during financial downturns.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

Analyzing the data from 2003 to 2023 reveals that CEWE Stiftung (CWC.DE) had a mixed performance in terms of earnings covering dividends. In most recent years like 2022 and 2023, the coverage ratio fell to roughly 0.326 and 0.302 respectively. This trend shows a declining ratio, suggesting that while the dividends remain stable, earnings aren't growing at a pace to cover them well. Consequently, this could hint at pressure on future dividend sustainability if the trend continues in the same direction. This lack of coverage can particularly be critical when earnings drop or do not expand at the anticipated rate, indicating a bad trend.

Dividends Well Covered by Cash Flow?

What does it mean for dividends to be well covered by cash flow?

For dividends to be well-covered by cash flow, a company must generate enough free cash flow to cover its dividend payouts comfortably. This means the ratio of free cash flow to dividends should ideally be greater than 1, ensuring that the firm can sustain its dividend policy without financial strain. This is important because dividends paid out of retained earnings or debt are less sustainable and can indicate financial stress.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments over the past 20 years, where the dividend per share did not drop by more than 20%, is crucial for income-seeking investors.

Over the past two decades, the dividend per share for CEWE Stiftung has shown remarkable stability. While there have been fluctuations, the payout never dropped by more than 20%, indicating a strong commitment to returning value to shareholders and a resilience in various market conditions. For instance, even during challenging periods like 2005, 2009, and slight drops in 2021, the decline did not breach the 20% threshold, maintaining investor confidence. Hence, this trend is favorable for income-seeking investors looking for consistent dividend payouts.

Dividends Paid for Over 25 Years?

Explain the criterion for CEWE Stiftung (CWC.DE) and why it is important to consider

CEWE Stiftung (CWC.DE) has been paying dividends for over 25 years, albeit with certain fluctuations. This criterion is important because it highlights the consistency of a company's profitability and its dedication to returning value to shareholders. Over the years, CEWE has demonstrated a regular payment of dividends, suggesting a stable financial performance and prudent management.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for CEWE Stiftung (CWC.DE) and why it is important to consider

Reliable stock repurchases signal a company's commitment to returning value to shareholders and optimizing capital structure. It can indicate financial health and management's confidence in the company's future. Over the past 20 years, CEWE Stiftung has shown seven years of share repurchases, notably in years like 2005, 2008, 2009, 2011, 2019, 2022, and 2023. These repurchases suggest a somewhat intermittent but ongoing strategy. The average repurchase activity of 1.154 times per year reinforces this trend. While not annually consistent, the pattern is positive as it underscores management's periodic intervention to manage equity efficiently. Compared to companies with more consistent annual repurchases, this could be seen as moderate; however, it still aligns with strategic financial management principles.