Last update on 2024-06-28

Ebix (EBIX) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis for Ebix (EBIX) using an 8-criteria scoring system. Final score: 5/8, showcasing performance and stability since initiating payouts in 2011.

Short Analysis - Dividend Score: 5

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

We analyzed Ebix (EBIX) using 8 criteria to assess its dividend policy. The company has a mixed performance. While its dividend yield is above the industry average and it maintains a conservative payout ratio, it has not paid dividends for over 25 years and shows volatility in its dividend growth rate. The company's dividends are covered well by earnings and mostly by cash flow, but the trend in cash flow coverage needs monitoring. Ebix has consistently paid dividends since it began in 2011, thus showing stability.

Insights for Value Investors Seeking Stable Income

In summary, Ebix shows some strong points in its dividend policy, particularly in its high yield and well-covered dividends. However, its inconsistent dividend growth and relatively short dividend history may be concerning for long-term dividend investors. It might be worth a look for those who value strong current yields and stable payouts since 2011, but proceed with caution if seeking long-term stability and growth in dividends.

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 compares the annual dividends paid out by a company to its current stock price. A higher yield can attract income-focused investors.

Charting the trend, Ebix had varying dividend yields, often outperforming the industry. Most notable is 2022's yield of 1.503%, well above the industry's 0.6%. The increment from 2021's 0.9868% is significant. The trend underscores Ebix's commitment to rewarding shareholders, especially attractive with the industry's decline to 0.6%.

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

The Dividend Growth Rate over a period of 20 years helps assess the sustainability and growth potential of a company's dividend policy. A growth rate above 5% is considered healthy and indicative of a strong financial position.

Ebix's dividend record over the past 20 years shows mixed results. For many years such as 2003-2011 and post-2012, there were no dividends paid at all. Additionally, a large negative dividend per share appeared in 2013 (-60.5263). Then, dividends spiked to 375 in 2012 and dropped to 300 in 2014. This inconsistency suggests an unstable dividend growth rate far below 5% annually. The average Dividend Ratio stands at 30.723685, but this doesn't reflect consistent or reliable growth. In conclusion, Ebix does not meet the criteria of a Dividend Growth Rate higher than 5% over the past 20 years. This indicates a volatile and unreliable dividend policy, which could be concerning for income-focused investors. The trend is unfavorable.

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

The payout ratio is an important measure of dividend sustainability, indicating the percentage of net earnings distributed to shareholders as dividends. A payout ratio lower than 65% typically signifies that a company retains enough earnings to facilitate growth, pay down debt, or retain cash for future needs, contributing to the long-term stability and reliability of dividend payments.

Evaluating the provided data for Ebix (EBIX) over the last 20 years, we observe that the company has consistently maintained its payout ratio well below 65%, with an average payout ratio of approximately 6.30%. This substantially low payout ratio indicates an extremely conservative dividend policy, which bodes well for the company's financial health, given its ability to reinvest earnings back into the business. Such a trend is favorable as it demonstrates disciplined financial management and a robust approach to sustaining operational efficiency while conservatively rewarding shareholders.

Dividends Well Covered by Earnings?

Examining whether dividends are well covered by earnings is crucial as it reflects the company’s ability to sustain dividend payments. A consistent and high coverage ratio suggests financial stability and that the dividends are less likely to be cut.

When examining the earnings per share (EPS) and dividend per share (DPS) of Ebix over the period from 2003 to 2022, we find an increasing trend in EPS from 0.0789 in 2003 peaking at 3.1722 in 2017 before slightly declining to 2.1015 in 2022. On the other hand, dividends only commenced from 2011, with DPS consistently at 0.3 since 2014. The coverage ratio of EPS to DPS has managed to sustain above 0.1, reaching a high of 0.179 in 2014 and showing reasonable strength even during slight EPS declines. This suggests that Ebix's dividends have been well covered by its earnings, indicating a healthy state of financial stability and signaling that they are unlikely to cut dividends soon without a significant drop in earnings.

Dividends Well Covered by Cash Flow?

This criterion evaluates whether the dividends paid by a company are sufficiently covered by its free cash flow, ensuring they are sustainable.

Looking at Ebix's financials from 2003 to 2022, it is clear that dividend payments began in 2011 and have been increasing since. While the free cash flow has generally risen over the period, the ratio of 'dividend payout to free cash flow' has ranged from 2.13% to 33.56%. In recent years, the coverage ratio stayed between 10% and 17%, reflecting adequate but inconsistent coverage. This trend suggests that Ebix's dividend payments are reasonably sustainable, though the decreasing coverage since 2018 warrants attention. Overall, the company's ability to cover dividend payouts with free cash flow is good but must be monitored.

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.

Examining the provided data, Ebix (EBIX) demonstrates stability in its dividend payments over the past 20 years. The dividends per share started at zero and gradually increased without dropping by more than 20% in any given year once initiated. The rise in dividends from 0.04 in 2011 to 0.3 consistently from 2014 to 2022 indicates a stable and growing dividend policy. This trend can be seen as positive for income-seeking investors because it reflects the company's commitment to returning value to shareholders through dividends without significant interruptions or reductions. Thus, Ebix passes this criterion successfully, adding a layer of reliability and predictability for its shareholders.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years refers to a company's consistency in returning value to its shareholders through dividends over a long period of time, indicating stability and investor confidence.

Ebix has not paid dividends for over 25 years. Analysis of data from 1998 to 2022 shows that the company only started paying dividends in 2011. Since then, Ebix has delivered a dividend per share ranging from $0.04 to $0.3 annually. Although maintaining a dividend payout over the past decade is commendable, the lack of dividends before 2011 means that Ebix does not meet the criteria of having paid dividends for over 25 years. This trend could be seen as a negative for investors seeking long-term dividend histories, yet it may not necessarily undermine the overall attractiveness for those focused on more recent performance and growth potential.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Ebix (EBIX) and why it is important to consider

Reliable stock repurchases over the past 20 years is a measure of how consistently a company has bought back its own shares. This is considered a positive signal as it can indicate management's confidence in the company's prospects as well as serve to increase Earnings Per Share (EPS) by reducing the number of shares outstanding. It is also viewed favorably by investors when evaluating the attractiveness of a company's stock.