Last update on 2024-06-27

Elbit Systems (ESLT) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis of Elbit Systems (ESLT) with a final score of 5/8, covering criteria such as growth rate, payout ratio, and dividend stability.

Short Analysis - Dividend Score: 5

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

The analysis of Elbit Systems' (ESLT) dividends is based on eight criteria, scoring a 5 out of 8. Key findings are: while Elbit Systems' dividend yield helps estimate expected returns, it's volatile. The dividend growth rate over 20 years is inconsistent, with notable ups and downs, which complicates affirming a stable >5% growth. However, the average payout ratio of 47.08% demonstrates a generally financially prudent approach, despite highs indicating over-distribution in some years. Dividends are generally covered by earnings but with slim margins recently, raising sustainability concerns. The dividends are also partially covered by cash flow. Elbit Systems has paid dividends for over 25 years, showing general stability, but reliable stock repurchases over the same period are low, failing to boost EPS and shareholder value effectively.

Insights for Value Investors Seeking Stable Income

Overall, Elbit Systems (ESLT) shows good but inconsistent performance in its dividend policy. If you're looking for stable, growing dividends, the volatility in growth and inconsistent stock buybacks might be concerning. While it has committed to dividends for over 25 years, ensuring some degree of reliability, it may not be the best choice for those prioritizing steady growth and high repurchase rates. Assess if this aligns with your investment goals, especially if you seek robust long-term potential.

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?

Explain the criterion for Elbit Systems (ESLT) and why it is important to consider

Elbit Systems' dividend yield is crucial because it provides investors with an immediate sense of the income they can expect from their investment, relative to the stock's market price. A higher dividend yield can signify a good return on investment, but it can also indicate higher risk or a stock price that has fallen significantly. Evaluating it against the industry average can help investors gauge Elbit's relative attractiveness.

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

The Dividend Growth Rate reflects the percentage increase in dividends over time. It is critical for investors seeking growing income streams.

Analyzing Elbit Systems (ESLT), the Dividend Per Share Ratio over the past 20 years displays highly volatile fluctuations. Despite some years of significant increases, such as 920% in 2004 and 310% in 2009, there are also years with sharp declines, including -74.0196% in 2005 and -52.381% in 2012. Given the extreme volatility and the zero growth in a few years, the Dividend Growth Rate's average calculation provides limited actionable insight into long-term trend stability. Although the average dividend ratio is 56.28%, the inconsistency year-to-year makes it challenging to affirm a robust and stable growth exceeding a 5% threshold reliably."}**}**}**}}**}}}}** }}}**ibitreau,i,t dividUn entanto yearierAllind 0Rhstatii);}TD functions.Finance recipient_

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

The payout ratio is the proportion of earnings paid out as dividends to shareholders, shown as a percentage.

The average payout ratio for Elbit Systems over the past 20 years is 47.08%, which is below the 65% threshold, signaling a good trend. This ratio indicates that Elbit Systems retains a significant portion of its earnings for reinvestment or debt reduction, demonstrating financial prudence. However, the high fluctuation, such as 157.99% in 2004 and 120.38% in 2011, reveals instances of over-distribution, which could cause potential cash flow issues during those years. Yet, the overall average remaining low is a positive indicator.

Dividends Well Covered by Earnings?

Dividends being covered by earnings per share is crucial in assessing a company's financial health and sustainability of its dividend policy.

The analysis shows that Elbit Systems has varying degrees of coverage for its dividends by earnings per share (EPS) over the years. For instance, in 2004, the coverage ratio was extraordinarily high at 1.58, implying that the company earned 1.58 dollars for every dollar it paid in dividends. Conversely, in 2008, the ratio was low at 0.17, suggesting less earnings compared to dividend payouts. Recent years show the coverage ratio hovered around 0.3 to 0.4, indicating that while dividends are covered, they are covered by a relatively slim margin. This range raises questions about the sustainability of high dividend payouts in the long run. Given the financial data, it appears that the trend is concerning unless bolstered by significant earnings growth or reduced dividend payouts.

Dividends Well Covered by Cash Flow?

Explain the criterion for Elbit Systems (ESLT) and why it is important to consider

The criterion 'Dividends Well Covered by Cash Flow' means the proportion of the company's free cash flow used to cover dividend payments. A ratio above 1 indicates that free cash flow fully covers dividend payments, a good indicator of financial health.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Elbit Systems (ESLT) and why it is important to consider

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. It provides assurance that the company has a consistent and reliable revenue stream, which implies financial health and commitment to returning value to shareholders.

Dividends Paid for Over 25 Years?

Whether Elbit Systems has paid dividends consistently for over 25 years, demonstrating stability and reliability.

Elbit Systems has a history of paying dividends for over 25 years, as evidenced by annual dividends per share from 1998 to 2023. The dividends per share have fluctuated over the years, with notable increases and occasional decreases, reflecting the company's adaptability to market conditions. Key points: the lowest dividend was $0.2 in 1998 and 2003, and the highest was $3.28 in 2009. Overall, a steady trend despite fluctuations confirms Elbit Systems' commitment to returning value to shareholders. This trend is good as it shows stability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases over the past 20 years indicate a company's dedication to returning value to shareholders and managing share dilution, which can stabilize and potentially increase the stock price.

Over the past 20 years, Elbit Systems (ESLT) has generally increased its number of shares from 40.23 million in 2003 to 44.38 million in 2023, reflecting a lack of consistent stock repurchases. In fact, the only significant years where stock repurchases can be identified are 2011 and 2012. On average, the repurchase rate has been extremely low, averaging just 0.4955%, which is negligible. This trend is not particularly favorable for investors looking for a history of consistent buybacks which can boost Earnings Per Share (EPS) and shareholder value.