Last update on 2024-06-28

Eutelsat Communications (E3B.F) - Dividend Analysis (Final Score: 3/8)

Comprehensive dividend analysis of Eutelsat Communications (E3B.F) using an 8-criteria score. Stability assessed over 20 years, revealing performance and reliability insights.

Short Analysis - Dividend Score: 3

We're running Eutelsat Communications (E3B.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

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 indicates how much a company pays out in dividends each year relative to its stock price. It is important to consider because it gives investors an idea of the income they can expect from holding the company's stock, and it is a key factor in assessing the attractiveness of a dividend-paying stock.

Eutelsat Communications (E3B.F) has a dividend yield of 0% in 2023, significantly lower compared to the industry average of 1.19%. Historically, Eutelsat had periods of high dividend yields from 2020 to 2022, with the highest being 13.1915% in 2021. However, a sudden drop to 0% in 2023 could be concerning. This discrepancy may be influenced by various factors such as reduced profitability, strategic reinvestments, or even economic conditions. The industry's comparatively stable dividend yield indicates that Eutelsat might be struggling to distribute dividends consistently. The stock price trend also shows a sharp decline from €10.67 in 2021 to €4.19 in 2023, reflecting reduced market value which could further impact dividend yield calculations.

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

The Dividend Growth Rate over a span of 20 years is a critical measure of the sustainability and attractiveness of a dividend-paying stock. A growth rate higher than 5% is generally considered a positive indicator of the company's ability to increase shareholder value over time.

Analyzing the given dividend ratios for Eutelsat Communications (E3B.F) over the last 20 years, it is evident that the company's dividend growth rate is inconsistent, and has periods of negative growth, especially in 2022 and 2023 where the dividend ratio plummeted dramatically, recording values of -22.0447 and -100 respectively. Such negative ratios indicate a cut in dividends, which is a red flag for dividend investors. With an average dividend ratio of -4.19 over the analyzed period, it is clear that Eutelsat Communications has struggled to maintain consistent dividend payouts. This trend is decidedly negative, suggesting that the company's ability to sustain and grow its dividends is questionable and may deter long-term dividend investors.

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

The average payout ratio indicates the percentage of net income distributed as dividends over time. A good average payout ratio should generally be below 65% to ensure sustainability.

The payout ratio data from 2003 to 2023 indicates that Eutelsat Communications (E3B.F) has maintained an average payout ratio of 13.83%, which is considerably below the 65% threshold over the past 20 years. This aligns with good financial practices for dividend sustainability. However, it's worth noting the significant spikes in 2020 (69.38%), 2021 (128.27%), and 2022 (92.81%), which could signal potential stress points or extraordinary situations. The more recent elevated payout ratios might warrant closer scrutiny as they are significantly higher than the historical average, which can be a concern for dividend stability if this trend continues.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings is crucial. It indicates that the company generates sufficient profits to support its dividend payouts. Sustainable dividends are a positive signal for investors, suggesting stability and financial health.

Eutelsat Communications has shown varied results in terms of earnings per share (EPS) and dividend per share (DPS) over the past 20 years. Except for recent years, there have been long periods (up to 2020) where either dividends were not paid out, or earnings barely covered dividends. In 2021, the EPS of 0.93 covered a dividend of 0.89 with a ratio of 0.6939, indicating poor coverage. In 2022, EPS to DPS coverage improved to 1.2826, driven by better earnings of 1.193 compared to slightly lower DPS of 0.93. However, by 2023, there were no dividends paid. Poor dividend coverage in earlier years and inconsistent payouts indicate areas of concern for investors focused on dividend stability.

Dividends Well Covered by Cash Flow?

Examine how comprehensively Eutelsat Communications' dividends are covered by either free cash flow or earnings.

The dividend coverage ratio, reflecting how well dividends are supported by free cash flow, provides crucial insight for shareholders regarding a company's ability to sustain dividend payouts. Over the evaluated period from 2003 to 2023, Eutelsat Communications shows significant fluctuations in its dividend coverage. The best coverage ratio observed was in 2007 at approximately 0.70, indicating dividends were well underpinned by cash flow during that year. However, in many other years, the coverage dips notably, with several years experiencing ratios as low as 0.15. Such low ratios suggest potential sustainability issues, as dividends substantially surpassed free cash flow generation in those periods. This instability could denote an alarming trend for income-focused investors, as erratic coverage poses substantial risks to predictable dividend payouts. Overall, the volatile nature of Eutelsat Communications' dividend coverage by cash flow raises a red flag regarding the dependability of its future cash flow sufficiency to maintain dividend commitments.

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.

The dividend per share for Eutelsat Communications over the past 20 years includes multiple years where no dividends were paid (from 2003 to 2022) except for 2019, 2020, and 2021. In 2020, a full dividend was reinstated at €0.89, followed by a 34% increase to €1.193 in 2021, and then a 22% drop to €0.93 in 2022. The dividend was reduced to €0 again in 2023. Therefore, there are significant fluctuations, surpassing the 20% threshold in 2022 and 2023 suggesting instability in dividend payments, which could be a concerning trend for income-seeking investors, emphasizing volatility and possibly weak business fundamentals.

Dividends Paid for Over 25 Years?

The criterion evaluates whether a company has consistently paid dividends for over 25 years. It reflects stability and reliability.

Eutelsat Communications (E3B.F) clearly falls short of this criterion. Analyzing data from 2001 to 2023, the company only started issuing dividends in 2020, with divis of 0.89 EUR, 1.193 EUR, and 0.93 EUR in subsequent years. Moreover, in 2023, there is no dividend recorded. This inconsistent dividend history over a relatively short period—coupled with a cessation of dividends in 2023—is indicative of limited reliability and stability in terms of rewarding shareholders. This trend is not favorable for investors seeking well-established dividend payers.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases refer to the consistent buyback of shares by a company. It is important as it signals company confidence and can enhance shareholder value.

For Eutelsat Communications (E3B.F), the number of shares increased from 0 in 2003 to 248,570,264 by 2023. However, reliable repurchased years were 2005, 2012, 2018, 2020, and 2021, meaning the company repurchased shares only a few times over the past 20 years. This intermittent repurchasing is not particularly impressive, averaging only 4.0147 reliable repurchases annually. Hence, the trend here can be considered weak and does not strongly signify management's consistent confidence in their stock. Additionally, with rising share count, this dilutes existing shareholders' value.