Last update on 2024-06-27

Dassault Aviation (DAU0.F) - Dividend Analysis (Final Score: 5/8)

Analysis of Dassault Aviation's (DAU0.F) dividend performance, scoring 5 out of 8 criteria. Evaluate its policies and sustainability from 2003 to 2023.

Short Analysis - Dividend Score: 5

We're running Dassault Aviation (DAU0.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Okay, so here's a simplified summary of the dividend analysis for Dassault Aviation (DAU0.F). The company's dividend yield is higher than the industry average, which is good for investors because it means better returns. However, the dividend yield has varied a lot over the past 20 years, which might worry some people. Looking at how fast the dividends have grown, things are all over the place. Sometimes the increase was huge, and other times there were no dividends at all. This inconsistency might concern people who want steady income from dividends. Dassault Aviation's payout ratio (the percentage of earnings given out as dividends) is generally very low, which is a plus. It means the company has been careful with its money and can keep some for growth. The company’s ability to pay dividends from both its earnings and free cash flow is good, which is another positive sign. But, while their dividends have increased over 20 years, they haven’t paid dividends consistently since 2011, and they missed payments in some years. Additionally, Dassault hasn’t been paying dividends for over 25 years, which might make the stock less reliable for some investors. Lastly, their stock repurchases are really unpredictable, so investors can’t count on them for steady returns.

Insights for Value Investors Seeking Stable Income

Given the dividend analysis, Dassault Aviation (DAU0.F) exhibits some strengths like a high dividend yield and a conservative payout ratio, which are good signs for potential investors. But there are some concerns too, such as the inconsistent dividend history and erratic stock repurchases. If you want a reliable and stable income stream, this might not be the best choice due to the fluctuations in dividends. However, if you're okay with potential ups and downs and looking for a company that manages its dividends prudently and offers higher returns occasionally, it could still be worth considering.

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?

Dividends yield reflects the annual percentage return earned by shareholders in dividends relative to the stock price. A higher dividend yield compared to the industry average can imply a better return for investors and make the company's stock more attractive.

Dassault Aviation's dividend yield stands at 1.6769%, which is substantially higher than the industry average of 1.16%. This suggests that Dassault Aviation offers better annual returns to its shareholders when compared to its industry peers. Over the past 20 years, Dassault Aviation has shown varied levels of dividend yields, ranging from 0% to an extraordinary peak of 15.4415% in 2018. Noteworthy is the fact that recent years, especially 2023's 1.6769%, are above the industry norms, signifying a positive trend. However, the substantial fluctuations in dividend yield reflect periods of inconsistency, which might raise concerns for conservative investors seeking stability. The dividend spike in 2018 could be attributed to a one-time significant event or payout.

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

The Dividend Growth Rate assesses whether a company's dividend per share has increased over time. A growth rate above 5% annually is generally favorable and suggests a healthy, growing firm.

Over the last 20 years, Dassault Aviation's dividend per share ratios have fluctuated significantly, with notable high points in 2016 (658.6777%) and 2017 (142%). Despite these peaks, there were also years with no dividends or negative ratios, such as in 2011, 2014, 2018, 2020, and 2022. While the average dividend ratio might seem impressive at 24.24%, this value is skewed by the very high peaks, and consistent annual growth above 5% is not evident. Therefore, the trend is not stable and does not consistently meet the criterion of a dividend growth rate higher than 5% annually. This instability could be concerning for potential investors seeking reliable dividend income.

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

Consideration of the payout ratio over a 20-year period is critical as it reflects the company's long-term sustainability in paying dividends. A ratio consistently below 65% suggests a firm balance between rewarding shareholders and retaining earnings for growth.

Based on the data provided, Dassault Aviation's average payout ratio over the last 20 years stands at approximately 18.69%. This figure is well below the 65% threshold, which is a positive indicator. It demonstrates that Dassault Aviation has maintained a prudent approach to distributing dividends, ensuring that it retains sufficient earnings to fuel growth and stability. Specific values stood out such as in 2018 and 2023 where payouts spiked significantly, particularly in 2018 reaching 265.88%. These instances are anomalies rather than the norm, likely attributed to exceptional economic events or major strategic decisions. Overall, the trend of maintaining a low payout ratio illustrates the company's fiscal discipline and prudent financial management.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

Earnings per share (EPS) represent the portion of a company's profit allocated to each outstanding share of common stock, and it indicates a company's profitability. In the context of dividend analysis, it is crucial to compare EPS with dividends per share (DPS) to determine if the company’s earnings are sufficient to cover its dividends. A higher coverage ratio suggests that the company can comfortably afford to pay its dividends from its earnings, making the dividends more sustainable and reliable.

Dividends Well Covered by Cash Flow?

Why it is important to consider if the dividends are well covered by cash flow.

A key metric in determining the sustainability of a company's dividend policy is whether the dividends are well covered by the company's free cash flow. Free cash flow is the cash generated by a company after accounting for capital expenditures needed to maintain or expand its asset base. When dividends are well covered by free cash flow, it indicates that the company is generating sufficient cash to not only sustain its operations but also return capital to shareholders without needing to rely on external financing or depleting reserves. Consistent coverage of dividends by free cash flow is often seen as a sign of good financial health and efficient capital management.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over 20 years indicate consistent financial performance and reliability.

Analyzing the provided dividend per share data for Dassault Aviation over the last 20 years, it is noticeable that dividends were not paid from 2003 to 2010. From 2011 onwards, although there have been fluctuations, the dividends generally increased, especially in 2018. For income-seeking investors, this pattern might be concerning as the absence of dividends in specific years indicates instability. Importantly, the lack of a 20% drop meets the stability criterion, showing overall resilience.

Dividends Paid for Over 25 Years?

Why is it important to assess if a company has been paying dividends for over 25 years?

A track record of dividend payments over 25 years speaks to a company's financial stability, profitability, and reliable cash flow. For Dassault Aviation (DAU0.F), the data shows dividend payments beginning in 2011, with some gaps thereafter, notably in 2020 and 2022. Consequently, the company has not maintained a continuous 25-year dividend payout history. While intermittent payments from 2011 are a positive indicator, the absence of dividends for several years suggests a potentially inconsistent dividend policy, impacting long-term investor confidence.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Dassault Aviation (DAU0.F) and why it is important to consider

Stock repurchases are a way for a company to return value to shareholders without committing to a regular dividend. Over the past 20 years, Dassault Aviation's number of shares outstanding has significantly changed only in a few years: 2014, 2015, 2016, 2022, and 2023. Notably, the fluctuation in shares was substantial in 2017, 2018, 2019, and 2020, which indicates volatility unrelated to repurchases. Relying on the average repurchase percentage of about 42.93% as a yardstick, Dassault's sporadic buyback activities, particularly in the last two years, cast uncertainties on whether stock repurchases can be deemed reliable. Although the company has reduced the number of outstanding shares on various occasions, the trend is not consistently reliable. This sporadic nature of buybacks would make it challenging for long-term investors to expect regular value enhancement through repurchases, thereby possibly downgrading its attractiveness to those specifically seeking this form of shareholder return.