Last update on 2024-06-27

Energiekontor (EKT.DE) - Dividend Analysis (Final Score: 4/8)

In-depth dividend analysis of Energiekontor (EKT.DE) using an 8-criteria scoring system, highlighting performance, stability, and financial health.

Short Analysis - Dividend Score: 4

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

We analyzed Energiekontor's (EKT.DE) dividend performance using an 8-criteria scoring system and obtained a score of 4. The criteria included dividend yield, growth rate, payout ratio, coverage by earnings and cash flow, stability, duration of payments, and stock repurchases. Energiekontor's dividend yield (1.2092%) is lower than the industry average (6.05%), indicating poor returns to shareholders through dividends. The dividend growth rate averages at 24.35%, but with significant fluctuations, it's unreliable. The payout ratio over the past 20 years has remained somewhat balanced but inconsistent. The coverage by earnings and cash flow also shows a mixed trend, with recent low coverage in 2023. The dividends have not been stable, with significant drops and even no dividends in some years. Energiekontor has paid dividends for 23 years, but not continuously. Stock repurchases have been inconsistent but somewhat beneficial on a per-share basis.

Insights for Value Investors Seeking Stable Income

Based on the analysis, investing in Energiekontor (EKT.DE) might not be the best option if you're looking for stable and consistent dividend returns. The company's dividends have been erratic, with periods of no payments and significant drops. The recent low coverage by free cash flow is a warning sign for future sustainability. If you prioritize dividend reliability, it may be worth looking at other stocks with more consistent and stable dividend histories.

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?

The 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 an important criterion for income-focused investors as it shows the return on investment from dividends alone. A higher dividend yield can signal a potentially good investment if it is sustainable.

Energiekontor's dividend yield of 1.2092% is significantly lower than the industry average of 6.05%. This indicates that the company is not performing as well in terms of returning profits to shareholders via dividends. Over the last 20 years, the company's dividend yield has shown considerable fluctuation, peaking at 14.2857% in 2006 and dropping to 0% in 2011. The low current dividend yield, coupled with high variability over the years, suggests a lack of consistency in dividend payouts. This might be a red flag for income investors looking for stable returns. Additionally, the trend shows a decrease in dividend yield in the most recent years, which might suggest that the company is retaining more earnings for growth or facing constraints in generating high profits.

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

Analyzing the Dividend Growth Rate over a 20-year period is essential as it reveals the sustainability and growth potential of a company's dividends. A consistent growth rate above 5% is generally considered healthy and indicative of a company's ability to increase shareholder value.

Over the past 20 years, the dividend per share growth rate for Energiekontor has shown significant volatility, with values ranging from a high of 275% in 2006 to -100% in 2011, and even periods of no dividends at all. The average dividend growth rate stands at 24.35%, which suggests an overall positive trend, but this average masks the underlying fluctuations. While an average rate above 5% can be considered good, the inconsistency and unpredictability in the yearly growth rates raise concerns. For dividend investors, consistency and predictability are as important as the growth rate itself. Therefore, while the long-term average appears healthy, the erratic nature of yearly changes makes it less reliable.

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

Explain the criterion for Energiekontor (EKT.DE) and why it is important to consider

The payout ratio indicates the proportion of earnings a company pays to its shareholders in the form of dividends. A payout ratio consistently lower than 65% suggests a balance between rewarding shareholders and retaining earnings for growth and investments. This measure underscores financial health and sustainability.

Dividends Well Covered by Earnings?

Dividends being well-covered by earnings means that the company generates sufficient profits to pay its dividends. This ensures sustainability and provides confidence to investors about future payouts.

Upon examining Energiekontor's earnings per share (EPS) and dividends per share (DPS) from 2003 to 2023, a few critical observations can be made. The EPS varies significantly over the years, with negative values in some years (e.g., 2007, 2009, 2010). Despite some fluctuations, impressive growth is noted from 2016 onwards, peaking in 2022 with an EPS of 3.1838. On the other hand, DPS started modestly but showed sustained and consistent growth beginning in 2014. A concerning trend, however, is the irregular coverage ratio of EPS over DPS. For instance, in 2007 and 2009, the ratios were negative. Years such as 2012, 2018, and 2021 displayed very healthy coverage ratios. Nonetheless, the fluctuations indicate an inconsistency that could be seen as risky for investors relying on dividend stability. Despite these variations, the strong earnings growth from 2019 onwards could suggest increasingly robust dividend coverage in future years. Overall, this trend exhibits positive aspects, but with caution regarding periodic earnings volatility and its effect on dividend sustainability.

Dividends Well Covered by Cash Flow?

Dividend coverage ratio indicates whether a company’s earnings are sufficient to cover its dividend payments. A ratio above 1 suggests that the company generates enough cash flow to cover dividends, which is crucial for sustainability.

The dividend coverage by free cash flow for Energiekontor (EKT.DE) has been inconsistent over the years. Significant negative values in 2007, 2012, 2013, 2017, and 2019 indicate periods where dividends were not well covered by free cash flow, with values as low as -0.58. Notably, in 2023, the dividend coverage ratio stands at 0.136, signalling that the company's free cash flow covers only about 13.56% of its dividend payouts. This trend suggests that while there have been periods of adequate coverage (e.g., years 2009, 2018, and 2020) with ratios above 1, the overall inconsistency and the recent lower ratio highlight potential risks for dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividends refers to the ability of a company to maintain a consistent dividend payout over time, which is essential for income investors relying on these payments.

Energiekontor (EKT.DE) has demonstrated a fluctuating dividend payout over the past 20 years. From 2003 to 2023, its dividend per share has seen significant variability, with values ranging from 0 to 1.0. Notably, the company's dividend payment dropped to zero in 2011, indicating a complete suspension of payouts in that year. Over this period, the most notable drops are as follows: a fall from 0.3 in 2003 to 0.08 in 2004 and 2005, a decrease from 0.3 in 2012 to 0.15 in 2013, followed by another significant drop from 1.2 in 2018 to 0.4 in 2019. These fluctuations imply that Energiekontor does not maintain a stable dividend payment and income investors may find this inconsistency challenging. Importantly, there is no instance where the dividend reduced by exactly 20%, but the periodic decline and zero payouts signal volatility. Such a pattern is concerning for investors seeking stable and predictable income streams.

Dividends Paid for Over 25 Years?

The number of years a company has consistently paid dividends is a significant indicator of financial stability and reliability.

Energiekontor (EKT.DE) has a mixed record of dividend payments over the past 23 years, showing periods when dividends were reduced to almost negligible levels or not paid at all (e.g., years 2010 and 2011). However, there is a trend of increasing dividends in recent years, with a more consistent payout above 0.8 EUR per share from 2016 onwards, reflecting improved financial health or shareholder returns. They haven't paid dividends consistently for over 25 years, making their history somewhat less attractive compared to companies with a longer and uninterrupted dividend-paying record. This can be rated as a suboptimal trend when evaluating the criterion of dividends paid for 25+ years.

Reliable Stock Repurchases Over the Past 20 Years?

What does it mean for Energiekontor to have reliable stock repurchases over the past 20 years and why is this metric important for dividend analysis?

Energiekontor's stock repurchases data reveals a mixed picture. Starting with 13,988,394 shares in 2003, the number generally declined over the years, although there was an increase in 2007 to 15,020,701 shares before resuming a downward trend, reaching 0 shares in 2023. Significant repurchase activities are noticeable in specific years like 2008, 2009, and consistently from 2011 to 2022. The average annual repurchase rate over these 20 years stands at -4.9851%. While a reduction in outstanding shares commonly boosts per-share metrics like Earnings Per Share (EPS), suggesting a shareholder-friendly approach, the inconsistency raises questions. The fact that there are repeated years with substantial buybacks—often pivotal for the stock’s valuation—may indicate strategic financial management but also a reactionary stance to market conditions. Therefore, the trend is cautiously favorable for investors focusing on dividends because it may strengthen per-share figures but the erratic nature calls for prudent scrutiny.