Last update on 2024-06-28

Christian Dior (DIO.DE) - Dividend Analysis (Final Score: 5/8)

In-depth analysis of Christian Dior's (DIO.DE) dividend stability and performance with an 8-criteria scoring system, scoring 5/8 for 2023.

Short Analysis - Dividend Score: 5

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

Christian Dior's dividend analysis against 8 criterias reveals a mixed performance. While the company's current dividend yield of 1.7532% is lower than the industry average of 2.5%, it has shown a substantial increase in dividends per share over the last three years. Its dividend growth rate is highly volatile, with an average ratio of 12.13% over the past 20 years, creating concerns about long-term reliability. The average payout ratio is a positive low at 9.6943%, indicating conservative dividend payments and a preference for reinvestment. Dividends are increasingly well-covered by earnings and cash flow, particularly post-2017. However, the stability in dividends is questionable due to zero dividend years (2017-2019) and dividends not being paid consistently over the past 25 years. Share buybacks have been reliable, indicating strong future earnings confidence.

Insights for Value Investors Seeking Stable Income

Given Christian Dior’s performance, the stock may attract investors looking for growth prospects rather than consistent dividend income. While recent improvements in dividend payouts and cash flow coverage are promising, the historical volatility and inconsistency in dividend payments might be a red flag for income-focused investors. However, the company's conservative payout strategy and increasingly reliable stock repurchases could present a growth opportunity. Potential investors should weigh the past volatility against recent positive trends and decide based on their risk tolerance and investment goals.

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 ratio of a company’s annual dividend to its share price. It is crucial as it helps investors ascertain the returns they may expect from dividend payments.

Christian Dior (DIO.DE) shows a current dividend yield of 1.7532%, which is actually lower than the industry average of 2.5%. This discrepancy might initially seem unfavorable. However, looking at the historical data, Christian Dior’s dividend yield has consistently increased from 0% up to its present figure within the last three years. In contrast, the industry’s average yield fluctuated significantly, recording peaks well above 4% and troughs below 1%. Given Christian Dior’s substantial increase in dividends per share from €4.202 in 2021 to €12.5 in 2023, this suggests the company is intensifying efforts to reward its shareholders more robustly despite lower relative yield. Additionally, the recent stock prices haven’t greatly surged, marginally affecting the yield rate. Hence, while the yield is lower than the industry average, the solid growth in dividends per share represents a positive trajectory indicating the potential for stabilization and reliability in dividends.

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

Explain the growth of dividends per share ratio over the past two decades for Christian Dior (DIO.DE), emphasizing the significance of monitoring the dividend growth rate.

Assessing the dividend growth rate of Christian Dior reveals a highly volatile pattern, with drastic increases and decreases. Although an average dividend ratio of 12.13% seems promising, the company's inconsistency poses questions about reliability for long-term investors. Positive trends such as an excellent 185.58% ratio in 2022 may be overshadowed by extreme negative values seen during multiple years. Therefore, while occasionally high dividends can be attractive, the overall historical unpredictability renders the recent increased averages less indicative of stable growth._ It is essential for investors to consider if intermittent high returns offset the apparent risk. The trend is mixed.

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

The Average Payout Ratio measures the proportion of earnings a company pays to its shareholders in dividends. A ratio below 65% indicates that the company is retaining sufficient earnings for growth and operations while providing a reasonable return to shareholders through dividends.

For Christian Dior (DIO.DE), the average payout ratio over the last 20 years is 9.6943%, significantly below the 65% threshold. This trend is positive as it indicates that the company has been conservative in its payout policy, likely retaining more earnings for reinvestment into the business. Given the fluctuations in the payout ratio, especially instances when it is zero, it appears that the company might prefer variable dividends based on performance and strategic considerations rather than maintaining a constant payout ratio.Overall, this is a positive sign for the company's financial health and potential for sustainable growth.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

Analyzing the coverage of dividends by the earnings per share (EPS) for Christian Dior (DIO.DE) over the past several years indicates varying trends. The dividend cover ratio, calculated as dividend per share divided by EPS, remained at 0.0 for many years, particularly in the early 2000s and periodically even more recently in years like 2017-2020 where dividends were zero. Periods where dividends began being distributed, such as around 2010 onwards encourage some positive insights. For instance, in 2010 the cover ratio was notably low at 0.115 which increased in subsequent years. Following moderate cover ratios in 2011 and 2012 (0.310 and 0.343 respectively), the trend presents improvement over the years summing up to 0.373 in 2022. These cover ratios imply the company has been increasingly consistent in providing dividends as it maintained a growing EPS relatively. This trend indicates a positive trajectory, affirming both sustainability and prudent management. Nevertheless, unforeseen jumps in the dividend in 2021 and 2022 should be paid close attention to as maintaining such high dividend amounts relative to their earning needs scrutiny. Conclusively, Christian Dior showcases a good mix of ensuring earnings adequately cover their distributed dividends which promotes financial credibility.

Dividends Well Covered by Cash Flow?

This criterion examines whether the dividends paid out by Christian Dior are consistently covered by its free cash flow. Cash flow coverage is critical because it indicates the financial health and sustainability of the company's dividend policy. A coverage ratio greater than 1 indicates strong coverage, meaning the company can easily cover its dividends, while a ratio less than 1 raises concerns about the sustainability of the dividends.

Analyzing Christian Dior's free cash flow and dividend payout from 2003 to 2023, the trend shows varied coverage over the years. Notably, for the year 2003, the dividend was not covered (-0.69 coverage ratio), indicating a payout that exceeded the available free cash flow, an unsustainable practice. However, consistent improvements are noticed with significantly stronger coverage in recent years, i.e., the ratio in 2019 was 1.06, showing robust coverage post-2017. Although there was notable fluctuation and even a coverage below 1 (0.24) in 2020, the latest figures (0.21 in 2023) suggest a significant improvement. The positive trend in recent years with ratios generally above 1 indicates a healthier and more sustainable dividend policy, favorable for investors seeking stable income from dividends. The lower ratios before 2017 highlight periods of potential risk but recent trends shed a positive outlook on forward sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Analyzing the provided dividend per share data for Christian Dior (DIO.DE) over the last 20 years reveals some significant variances. For the initial years, from 2003 to 2009, the company did not pay any dividends. When dividend payments commenced in 2010, the trend initially showed an increasing pattern: starting from 2.1 in 2010 to a peak of 3.55 in 2016. However, there was a notable disruption in stability as no dividends were paid in 2017, 2018, and 2019, a period that is crucial to note. This drop to zero signifies a 100% reduction, considerably off the stability criterion. After resuming dividends in 2020, the values dramatically increased to 4.202, 12, and 12.5 in subsequent years, showing a robust recovery and significant growth. Overall, considering the drops to zero during 2017-2019, Christian Dior failed to maintain stability in dividends over the past two decades. This indicates a lack of consistent payout, which might be a red flag for income-seeking investors despite the recent augmentation in dividend per share.

Dividends Paid for Over 25 Years?

Discuss whether Christian Dior has paid dividends for over 25 years. Highlight the historical consistency and implications for investor trust and interest.

The data shows that Christian Dior has not paid dividends consistently over the past 25 years. From 1998 to 2010, there are no recorded dividends. It is only after 2010 that dividends begin to appear, with rates starting around 2.1 euros per share and fluctuating over the years. Inconsistent dividends, particularly the zero payouts in years with positive figures like 2018, 2019, and 2020, diminish investor trust. However, the sharp increase to 12 and 12.5 euros per share in recent years could suggest a strategic pivot or recovery phase. Overall, this history of inconsistency is a bad trend for long-term dividend stability.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Christian Dior (DIO.DE) and why it is important to consider

The data shows varying numbers of shares over the past 20 years, with notable declines in shares listed during 2004, 2007, 2008, 2009, 2013, 2016, and more recently in 2023. Furthermore, a significant drop in the number of shares is evident in 2016 and 2023, implying reliable stock repurchases. An average repurchase impact, expressed as -10.0411, suggests a shrinkage over the period. Consistent share buybacks generally indicate a firm’s confidence in its own future earnings and stock valuation. Given Christian Dior struck negative numbers due to transactions or declarations, these buybacks are affirmative for consolidating investor value and helping in Earnings Per Share (EPS) appreciation.