Last update on 2024-06-27

EBay (EBAY) - Dividend Analysis (Final Score: 6/8)

Comprehensive analysis of eBay's (EBAY) dividend stability and performance, scoring 6 out of 8 based on a detailed 8-criteria system. Learn its strengths and weaknesses.

Short Analysis - Dividend Score: 6

We're running EBay (EBAY) 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 represents the ratio of a company's annual dividend compared to its share price, a critical metric for income-oriented investors. A higher yield could indicate a strong return on investment from dividends alone, independent of potential capital gains.

EBay's current dividend yield stands at 2.2925%, markedly above the industry average of 0.69%. This positive trend is supported by the increase from 1.5508% in 2019 to 2.2925% in 2023. Despite previous years of no dividend payments, this upward trend in recent years suggests a lucrative dividends policy adopted by EBay. Given the relatively low industry averages, this result is advantageous and could signal EBay's robust financial health and commitment to returning value to shareholders. This is especially insightful for investors focused on income generation.

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

Explain the criterion for EBay (EBAY) and why it is important to consider

The dividend growth rate is essentially the annualized percentage growth rate of a company's dividend payments. It reflects the rate at which a company's dividend payments to shareholders have increased over a specified period of time. This metric is crucial as it indicates the company's financial health and its commitment to returning value to shareholders. A consistent and high dividend growth rate can attract income-focused investors, enhance shareholder loyalty, and stabilize the stock price in volatile markets. Hence, evaluating the dividend growth rate for EBay (EBAY) over the past 20 years will provide important insights into its financial strategy and shareholer value.

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

Explain the criterion for EBay (EBAY) and why it is important to consider

The Average Payout Ratio (APR) measures the percentage of earnings a company pays to its shareholders as dividends. A lower APR can indicate stable earnings and sustainability of dividends. An APR below 65% is generally considered healthy.

Dividends Well Covered by Earnings?

how well dividends are covered by earnings per share (EPS) and the importance of this criterion

Assessing the degree to which a company's dividends are covered by its earnings per share (EPS) is essential for evaluating the sustainability of its dividend policy. This criterion helps investors understand whether a company's profits are sufficient to cover its dividend payments. If dividends are well-covered by EPS, it indicates financial strength and the ability to maintain or even increase dividends in the future without jeopardizing the company's financial health.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow is a measure of whether a company's Dividend Payouts are sustainable from its Free Cash Flow. It shows the fiscal prudence of a company's payout strategy and affects long-term investor satisfaction.

Examining eBay's Free Cash Flow and Dividend Payout amounts from 2015 to 2023 indicates a healthy coverage: the Dividend Payout ratios to Free Cash Flow fluctuated between approximately 18.46% to 27.09%. These percentages suggest that eBay has a cautious approach to ensuring dividends are paid sustainably. Since a ratio significantly below 100% suggests good dividend coverage, eBay's figures importantly indicate strong financial health and forward planning, offering reassurance to long-term investors.

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.

Over the past 20 years, eBay has only started issuing dividends in 2019. The dividend per share has grown steadily from $0.56 in 2019 to $1 in 2023. This indicates a positive trend, as the company has increased its dividend payout without any drops that exceed 20%. The lack of a 20% drop suggests stability, which is good for income-seeking investors who prioritize consistent and reliable dividends. However, since the company has only been paying dividends for the last five years, it might not fully meet the criterion of stability over 20 years.

Dividends Paid for Over 25 Years?

This criterion evaluates whether a company has a track record of paying dividends consistently for over 25 years, which is important as it indicates financial stability and reliability for income-seeking investors.

By examining the data from 1998 to 2023, it is evident that eBay (EBAY) has not been paying dividends for over 25 years. In fact, the company's dividend payouts started only in 2019 with $0.56 per share and have been gradually increasing each year, reaching $1 per share in 2023. While the trend of increasing dividends is positive and shows a commitment to returning value to shareholders, eBay does not meet the criterion of having paid dividends for over 25 years. This could be seen as a negative for very conservative investors who prioritize a long track record of dividend payments, but may not be as crucial for those focusing on recent payout sustainability and growth.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years for EBay (EBAY)

eBay’s shares outstanding over the last 20 years show a significant repurchase program. The average percentage of shares repurchased annually is approximately -1.6053%, indicating that eBay has decreased its shares consistently. This trend is particularly evident in recent years, with share counts dropping from 1.31 billion in 2003 to 530 million in 2023. Stock repurchases can signal management's confidence in the company’s financial health and a commitment to returning value to shareholders. Consequently, eBay's consistent repurchase program is a positive development, showing strong financial discipline and a shareholder-friendly approach.