Last update on 2024-06-27

Evercel (EVRC) - Dividend Analysis (Final Score: 6/8)

Evercel (EVRC) Dividend Analysis: Performance & stability review using 8-criteria scoring system. High yield but unstable - final score: 6/8.

Short Analysis - Dividend Score: 6

We're running Evercel (EVRC) 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 annual dividend payment as a percentage of the stock price. It's a critical metric for income-focused investors.

Evercel (EVRC) boasts a staggering dividend yield of 156.25% in 2023, sharply higher than the industry average of 17.6%. This is a remarkable increase from zero dividend yield two decades ago. However, a high dividend yield can sometimes indicate investor concerns over the company's growth prospects, especially given EVRC's slight decline in stock price from $0.88 in 2003 to $0.80 in 2023. Although the high yield might attract dividend seekers, it raises questions on sustainability, particularly with such an unusually high figure.

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

Dividend Growth Rate indicates the percentage increase in dividends paid to shareholders over a specified period. A rate higher than 5% implies strong financial health and generous reward sharing with shareholders.

Based on the data, Evercel (EVRC) has had a Dividend Ratio of 0 in both 2003 and 2023, resulting in an Average Dividend Ratio of 0.0. This clearly indicates that there has been no dividend distribution over the last 20 years. Thus, the Dividend Growth Rate is essentially non-existent. This trend is unfavorable as it suggests that the company either does not generate sufficient profits to return value to its shareholders or chooses to reinvest all profits back into the business instead of paying dividends.

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

The payout ratio indicates the proportion of earnings a company pays to shareholders in dividends. A lower payout ratio often signals sustainability.

For Evercel (EVRC), the average payout ratio over the last 20 years is 0%. This indicates that the company has not paid out any dividends from its earnings over this period. Consequently, Evercel has retained all its earnings for reinvestment or other purposes. Not paying out dividends is neither inherently good nor bad; much depends on the company's strategic goals and how it uses those retained earnings. However, for an investor seeking dividend income, Evercel may not be an attractive option based on this criterion.

Dividends Well Covered by Earnings?

Assessing whether dividends are well covered by earnings is critical as it indicates sustainability and potential for growth.

For Evercel (EVRC), the earnings per share (EPS) from 2003 to 2023 were both zero. Meanwhile, the company paid a dividend per share of $1.25 in 2023. Given that the EPS is zero, this means that the dividends are not covered by earnings. They are likely being funded by other means, such as cash reserves or debt. This trend is generally negative as it suggests that the company’s dividend payments are unsustainable in the long term unless EPS improves.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means evaluating whether a company's free cash flow is sufficient to cover its dividend payments. This is important because a consistent mismatch between the two can indicate potential liquidity problems and the risk of dividend reductions or omissions in the future.

Evercel (EVRC) shows a Free Cash Flow of $0 both in 2003 and 2023, with Dividend Payout Amounts of $0 for both years as well. Consequently, the dividends covered by cash flow remain at 0. This trend is neither particularly good nor bad in isolation but implies no change or growth in potential investor returns through dividends over the two-decade period. Given these static figures, investors may question the company’s potential for generating excess cash flow to distribute dividends, impacting its attractiveness compared to dividend-paying stocks.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over an extended period signify a company's consistent earnings and prudent financial management, which is vital for investors seeking reliable income streams.

Evercel (EVRC) has shown a relatively unstable dividend history over the past two decades. The dividend per share has increased from 0 in 2003 to 1.25 in 2023. However, there's an indication that at some point, there was a drop of more than 20%. This breach in stability may concern income-focused investors as it suggests periods of financial stress or profit volatility.

Dividends Paid for Over 25 Years?

How long a company has been paying dividends is a direct indicator of its financial stability and shareholder commitment. Companies with a long history of dividend payments are often seen as more reliable investments.

Evercel's record of dividends paid shows no dividends issued in 2002 and 2003, but a payout of $1.25 per share in 2023. This lack of a consistent 25-year dividend payment history represents a weak trend in terms of long-term financial stability and reliability for income-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases are indicative of a company's ongoing commitment to return value to its shareholders. It can signal confidence in the firm's financial stability.

Over the past 20 years, Evercel (EVRC) reduced its outstanding shares from 9,700,000 in 2003 to 8,522,200 in 2023, marking a 12.1423% decrease. This suggests an average annual repurchase rate of around 0.61%, which is relatively modest. However, the repurchases were noticeable in 2023, with no consistent pattern throughout the other years. While the trend seems positive, reflecting some degree of value return, the lack of consistency indicates that Evercel doesn't have a robust repurchase strategy. This sporadic approach may raise questions about the company's long-term commitment to share repurchases as a value-enhancing strategy for shareholders.