Last update on 2024-06-27

CTS Eventim AG & Co. (EVD.DE) - Dividend Analysis (Final Score: 3/8)

Evaluate the dividend stability of CTS Eventim AG & Co. (EVD.DE) with our 8-criteria scoring system, revealing a modest score of 3/8.

Short Analysis - Dividend Score: 3

We're running CTS Eventim AG & Co. (EVD.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis assessed CTS Eventim AG & Co. (EVD.DE) based on an 8-criteria scoring system and it scored 3 out of 8. The current dividend yield of 1.6933% is higher than the industry average of 0.96%; however, it's been volatile over the years. The average annual payout ratio over the past 20 years is around 69.96%, slightly higher than the ideal 65%, indicating some inconsistency. While recent payout ratios show improvement, the company's dividends have not always been well covered by earnings or cash flow, particularly during the 2003-2005 and 2020-2022 periods when no dividends were paid. The dividend history also shows instability, failing to meet the 25-year consistent dividend payment criterion. The firm hasn’t focused on consistent share buybacks either, with notable repurchases occurring only in 2018.

Insights for Value Investors Seeking Stable Income

CTS Eventim AG & Co. (EVD.DE) shows potential with its better-than-average dividend yield and recent improvements in payout ratios. However, the historical volatility, inconsistent dividend coverage by earnings and cash flow, and lack of stability in dividend payments over the years are concerning. Investors looking for consistent and reliable income may want to be cautious and consider these factors carefully before investing in this stock. If prioritizing growth and are willing to tolerate some risk, then it might be worth exploring further.

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 measures a company's annual dividend payments as a percentage of its stock price, indicating income relative to stock price.

CTS Eventim AG & Co.'s (EVD.DE) current dividend yield of 1.6933% surpasses the industry average of 0.96%. Historically, its dividend yields have fluctuated significantly, peaking at over 8% around 2008-2009. The yield dropped to negligible levels between 2020-2022, likely impacted by the pandemic, but it has now rebounded to 1.6933%. This higher-than-average yield is a positive sign, suggesting that the company offers relatively better income returns than industry peers. However, the fluctuating historical trend and recent recovery also indicate volatility.

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

Explanation of why the dividend growth rate higher than 5% over the last 20 years is an important criterion to consider for CTS Eventim AG & Co. (EVD.DE).

The dividend growth rate is a fundamental measure to evaluate a company’s financial health and shareholder value. A higher and consistent growth rate over 5% indicates a robust and growing company, which is certainly appealing to investors. CTS Eventim AG & Co. operates in the event and live entertainment sector, an industry influenced deeply by economic cycles and external events like the COVID-19 pandemic. Therefore, a resilience in dividend growth offers assurance of management’s confidence and the company’s profitability.

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

This criterion examines whether the company's average dividend payout ratio over the past 20 years has been below 65%. A payout ratio below 65% can indicate that the company is retaining enough earnings to reinvest in growth while still rewarding shareholders.

The average payout ratio for CTS Eventim AG & Co. (EVD.DE) over the past 20 years is approximately 69.96%, which is higher than the desired threshold of 65%. This indicates that, on average, the company has distributed approximately 70% of its earnings as dividends. The trend shows significant fluctuation and some years with zero payouts, which can signal inconsistent dividend policies. Specifically, high payout ratios above 100% in the years 2006-2011 suggest that the company may have been paying more in dividends than its earnings, possibly putting financial strain on retained earnings. While the recent payout ratio for 2023 is notably lower at around 37%, indicating a more conservative and potentially sustainable approach, the overall average still raises some concerns about dividend policy stability and sustainability.

Dividends Well Covered by Earnings?

Explain the criterion for CTS Eventim AG & Co. (EVD.DE) and why it is important to consider

Dividends are considered well covered if the earnings per share are consistently higher than the dividend per share. It is an important measure of financial health, as it indicates the company's ability to sustain its dividend payouts. For the given data, calculating the coverage ratio shows multiple instances where the earnings might not sufficiently cover the dividends, especially in recent years, which could be concerning for investors.

Dividends Well Covered by Cash Flow?

This criterion assesses whether a company's dividends are well-supported by its free cash flow, a vital measure of financial health, indicating if the company can sustain dividend payments without relying on external financing.

CTS Eventim AG & Co.'s free cash flow data from 2003 to 2023 demonstrates substantial volatility, with significant negative free cash flow in years like 2003, 2010, 2020, and no dividends paid during certain years such as 2003-2005, 2020-2022. The ratio of dividend payments covered by cash flow in other instances reveals reasonably good coverage some years (e.g., 2019's 0.601) but worrying under-coverage in others, like 2010's -4.804. This inconsistency indicates a potential challenge in reliably supporting dividend commitments purely with operational cash flows, suggesting investors should carefully consider the firm's ability to maintain dividends during less profitable phases. The recent positive trend in free cash flow from 2021 to 2023, topping at €459.13 million debuting dividends of €101.751 million in 2023 (coverage ratio of 0.221), signals tentative improvements, but sustained monitoring is recommended to assure robust future payouts.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments over the past 20 years is crucial as it demonstrates the company's reliability in providing returns to its shareholders. Consistent dividends can signal financial health.

Examining the dividend payouts of CTS Eventim AG & Co. over the past 20 years, it is evident that there were fluctuations. Specifically, the dividends dropped to zero in certain years (2003-2005, 2020-2022), raising concerns about stability. Moreover, there was a significant drop in 2011 and 2015, where dividends were reduced by more than 20% from the previous year. Although there is an encouraging increase in recent years with a dividend of 1.06 in 2023, the inconsistency and periods of zero payout indicate that the company may not yet be reliable for income-seeking investors prioritizing dividend stability.

Dividends Paid for Over 25 Years?

Evaluating if a company has paid dividends for over 25 years is essential. It indicates consistency, reliability, and potential stability in turbulent market conditions. A lengthy dividend payment history also reflects long-term financial health.

The data for CTS Eventim AG & Co. (EVD.DE) shows that the company has paid dividends inconsistently since 2002. Specifically, the company initiated dividend payments in 2006. From 2020 to 2022, the company paid no dividends, likely due to the global financial challenges brought by the COVID-19 pandemic. Although dividends resumed in 2023, this uneven history does not meet the 25-year consistent dividend payment criterion. This trend indicates a lack of consistency in dividend distribution, affecting investor confidence in long-term financial stability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases entail a company buying back its own shares consistently over the years, which indicates confidence in its own financial health and can be a sign of returning value to shareholders. It reduces the number of shares outstanding, potentially increasing the value of remaining shares.

CTS Eventim AG & Co. has shown a limited engagement in reliable stock repurchases over the past 20 years. With an average repurchase rate of 4.9995% and only one notable repurchase year in 2018, the trend indicates that the company hasn't focused much on share buybacks. This might suggest that the company has prioritized different strategies for capital allocation, such as investing in its core operations or considering dividends directly instead. In all fairness, the steady number of shares from 2016 to 2023 (95,991,300 shares) shows a lack of aggressive buybacks, which can either mean a strategic decision on the company’s part or a conservative financial approach.