Last update on 2024-06-27

Danaher (DHR) - Dividend Analysis (Final Score: 6/8)

Analyze Danaher (DHR) for its dividend performance and stability. Learn about its scoring on key dividend criteria on our 8-factor evaluation system.

Short Analysis - Dividend Score: 6

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

Danaher (DHR) had a Dividend Score of 6 based on an 8-criteria system evaluating performance and stability. Over 20 years, the Dividend Yield mostly surpassed industry averages, showcasing an attractive return for income-focused investors. The Dividend Growth Rate was variable yet generally exceeding the 5% mark, hinting at robust financial health. The Payout Ratio averaged 38.88%, showing sustainability. Earnings coverage for dividends remained strong, indicating reliable policies. Free Cash Flow also adequately covered dividends, reinforcing sustainability. Lastly, the company has paid stable dividends for two decades without major drops, enhancing investor confidence. Despite minor fluctuations, stock repurchases were moderately reliable, showing a commitment to shareholder value.

Insights for Value Investors Seeking Stable Income

Overall, Danaher (DHR) demonstrates a solid dividend policy with strong growth rates, sustainability, and coverage by earnings and cash flow. The stable and growing dividends are attractive for income-seeking investors, though occasional variability is noted. With more years of dividends and consistent repurchase efforts, investing in Danaher seems 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?

Dividend yield and why it is important to consider

The 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 measure because it provides an idea of the income generated from an investment in the company's shares. A higher dividend yield can indicate that a stock is more attractive for income-focused investors.

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

The Dividend Growth Rate over a substantial period is essential to gauge the consistency and trajectory of a company's dividend policy. A growth rate exceeding 5% indicates robust financial health and strong future dividend prospects.

Based on the given data, Danaher (DHR) has experienced highly variable dividend growth rates over the past 20 years, with an average annual Dividend Ratio at an extraordinary 261.09%. However, these figures include substantial spikes, such as the over 4952% jump in 2016, which may distort the average. While multiple years show double-digit growth rates, years like 2023 show a relatively low growth of 11.53%, and 2015 had an anomalous 0% growth. Despite occasional negative growth years, the overarching trend remains positive, generally surpassing the 5% criterion. Such variability can signify dividends might be influenced by strategic actions such as acquisitions or substantial profit swings, but overall, Danaher appears to maintain a robust and potentially attractive dividend growth trend, which is quite promising for investors.

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

The payout ratio represents the percentage of earnings paid out as dividends to shareholders. It is important for assessing dividend sustainability.

For Danaher (DHR), the payout ratio from 2003 to 2023 averages around 38.88%, which is well below the 65% threshold. Lower payout ratios are generally positive as they indicate a company is retaining more earnings for growth and stability. However, some of the individual yearly values are unusually high, particularly in 2016 and afterward, likely due to extraordinary circumstances or one-time events affecting earnings.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. This metric shows whether the company can easily pay dividends out of its earnings. A high cover ratio indicates a company is more efficient and reliable in terms of dividend sustainability, as they aren't overreaching their earnings to satisfy dividend payments.

Looking into the data for Danaher (DHR), the earnings per share (EPS) from 2003 to 2023 seem to increase with some fluctuations. The dividends per share (DPS) have also generally risen over this period. The pertinent metric, coverage ratio, indicates that for most years, earnings sufficiently cover dividends. Notably, in 2016, the ratio was particularly high due to a special dividend, which results in an outlier at 6.89. Ignoring this year, the cover ratio fluctuates but remains at a reasonably sustainable level above 0.08 in most years. This pattern indicates that Danaher reliably covers its dividends with its earnings, suggesting a relatively safe and consistent dividend policy overall. Such consistency is often seen positively by investors focusing on dividend stability.

Dividends Well Covered by Cash Flow?

dividends well covered by cash flow

Free cash flow (FCF) assessment looks at the liquidity a company has at its disposal to pay dividends. It represents the operational cash left over after capital expenditures, reflecting the company's profitability, efficiency, and ability to sustain its dividend payout. For Danaher (DHR), tracking the free cash flow alongside dividend payout amounts from 2003 to 2023 reveals the company's capacity to balance these payouts.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends create a reliable source of income and reflect the company's financial health.

Reviewing the given dividend data from 2003 to 2023 for Danaher (DHR), we notice that the company has not experienced a drop of more than 20% at any point during the last two decades. The dividend per share has shown a general upward trend, albeit with an anomaly in 2017 when the dividend jumped dramatically, which seems like a data error or an extraordinary event. Ignoring this outlier, the dividends have otherwise been stable and increasing. This consistency is positive for income-seeking investors, indicating a resilient and growing dividend policy.

Dividends Paid for Over 25 Years?

Explain the criterion for Danaher (DHR) and why it is important to consider

The criterion here examines whether DHR has paid dividends continuously for over 25 years. Continuous dividend payments signify strong financial health and management competence, reflecting a company's ability to generate consistent cash flows.

Reliable Stock Repurchases Over the Past 20 Years?

Criterion : Reliable Stock Repurchases Over the Past 20 Years?

Analyzing the average number of shares repurchased over the past 20 years provides insight into the company's capital allocation strategy. This trend is considered favorable if the company consistently reduces its shares outstanding, indicating a shareholder-friendly approach. The given data show that Danaher (DHR) has had years of reliable stock repurchases in 2006, 2009, 2013, 2015, 2016, and 2020. These sporadic repurchases, combined with the provided yearly share counts, suggest an average repurchase rate of 66.17%. However, the data also reveal periods of increased shares outstanding, which could be due to acquisitions or other capital needs. On average, the reliability of repurchases appears moderate, as seen by fluctuations in shares. Evaluating this trend shows that while there have been meaningful buybacks, the overall trajectory includes extended intervals of share count stability or increase.