Last update on 2024-06-27

Fielmann (FIE.DE) - Dividend Analysis (Final Score: 3/8)

In-depth dividend analysis of Fielmann (FIE.DE) with a final score of 3 out of 8. Evaluates the performance and stability of the company's dividend policy.

Short Analysis - Dividend Score: 3

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

Fielmann (FIE.DE)'s Dividend Analysis was based on an 8-criteria scoring system, and the stock received a score of 3, which indicates it has room for improvement. Key points are: 1. Dividend Yield: Fielmann’s yield has been very volatile and dropped to 0% in 2023, unlike the stable industry average. 2. Dividend Growth: The company struggles to maintain a high growth rate, influenced by the current financial situation. 3. Payout Ratio: Over the past 20 years, the Average Payout Ratio is overly high at 136.73%, suggesting unsustainable dividend payments. 4. Earnings Coverage: The dividends were mostly covered by earnings until 2013 but not consistently covered in recent years. 5. Cash Flow Coverage: While positive overall, coverage has been inconsistent with some years showing unsustainable payout ratios. 6. Stability: Dividend stability is under question especially in 2015 and 2021. 7. Longevity: Been paying dividends since 2001, missing the 25-year mark. 8. Stock Repurchases: Rare and modest, the company's repurchase activities are not aggressive but stable.

Insights for Value Investors Seeking Stable Income

Fielmann (FIE) received a mediocre score and seems to struggle with the consistency and sustainability of its dividend policy. Some key issues like high payout ratios, recent financial instability, and inconsistent dividend payments suggest caution. If you're looking for stock investments specifically for their dividends, you might want to proceed with caution or explore other opportunities where the dividend policy appears stronger and more sustainable.

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 the annual dividend payout relative to the stock price. A higher dividend yield often indicates a good return on investment. It's important to compare it against the industry average to understand its competitive standing.

Fielmann's dividend yield has historically been more volatile than the industry average, seeing peaks of 13.62% in 2003 and lows of 0% in 2023. Whereas, the industry average remained relatively stable with smaller variations, e.g., 0.67% in 2003 to 1.21% in 2023. A sharp decline to 0 in 2023 suggests possible financial instability or strategic reinvestment, aligning poorly against the stable industry average.

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

Explanation of the importance of Dividend Growth Rate for Dividend Analysis.

The Dividend Growth Rate is a measure of the annualized percentage rate of growth of a company's dividend distribution. It is integral to consider for dividend analysis because a consistent and growing dividend payout indicates financial health, operational success, and shareholder reward sustainability. A rate higher than 5% over a significant period, such as 20 years, suggests the company regularly increases its dividend payouts, which can indicate strong earnings growth and good management practices.

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

Average Payout Ratio lower than 65% indicates that the company is distributing a manageable portion of its earnings as dividends.

For Fielmann (FIE.DE), the Average Payout Ratio over the past 20 years has been 136.73%, which significantly exceeds the 65% threshold. This suggests that the company is distributing more than its earnings at times, or even dipping into reserves or taking on debt to maintain its dividend. This could be a dangerous trend, as it may not be sustainable in the long term. Companies with such high payout ratios are at risk of dividend cuts, especially in adverse market conditions. On the other hand, current investors might appreciate the high dividends, but the sustainability and future growth of these dividends could be in jeopardy.

Dividends Well Covered by Earnings?

Dividends well covered by earnings is a criterion that signifies a company's ability to pay dividends from its profits rather than borrowing or dipping into reserves. A coverage ratio, typically known as the payout ratio, of less than 1 means the company uses all its earnings or more to pay the dividend, which could be unsustainable. Ideally, this ratio should be comfortably above 1 to provide a safety margin.

Examining the ratio of earnings per share (EPS) to dividends per share (DPS) for Fielmann (FIE.DE) over the years indicates varied trends. From 2003 to 2012, the dividend coverage mostly remains above 1, showing that the dividends were well covered by earnings. However, from 2013 onwards, the coverage ratio occasionally dips below 1, notably in 2015, 2016, 2017, and the subsequent years. This suggests that the company might have struggled to cover its dividends from earnings alone, undermining the sustainability of such payouts. In 2023, the absence of dividends indicates possible financial prudence or pressures, adding to concerns about Fielmann's dividend sustainability. A continuous trend of not being able to cover dividends with earnings could signal potential risks for investors focused on yield.

Dividends Well Covered by Cash Flow?

An essential criterion for evaluating a company's dividend sustainability is whether the dividends are covered by the free cash flow. Free cash flow represents the cash generated by the company after accounting for capital expenditures necessary to maintain or expand its asset base. This metric is crucial for dividend sustainability as it shows the company's ability to generate enough cash to continue paying dividends without compromising its financial health. A consistent positive free cash flow and a lower payout ratio indicate a well-covered dividend policy which, in turn, suggests financial robustness.

Fielmann's free cash flow has generally been positive over most of the years, reflecting a robust capability to generate cash post essential expenses. The dividend payout coverage, derived as the ratio of free cash flow to dividend payout, reveals variability with some periods showing strong coverage (e.g., 2007 at 780.82%, 2010 at 81.96%) and others demonstrating lower or even negative coverage (e.g., 2013 at -505.77%). While Fielmann has had consistent dividend payouts since 2008, years like 2013 raise concerns, as negative ratios mean dividends exceeded free cash flow, potentially dipping into reserves or inflating debts. More recent years (2016-2023) show a mixed trend, with coverage frequently below the ideal threshold of 100%, meaning dividends are not fully covered by free cash flow, signaling cautious or strained financials. Specifically, in 2023, where coverage was at 32.14%, it suggests potentially unsustainable dividend payouts unless supplemented by other financial sources. Despite reasonable coverage in earlier years, the trending decline calls for scrutiny.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Fielmann (FIE.DE) and why it is important to consider

Analyzing the trend in dividend stability for dividend payments over the past 20 years (2003 - 2023) for Fielmann. It's evident that in 2015 and 2021, dividends plunged significantly, below the -20% threshold, harming the trend.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years is a significant indicator of a company's financial health and stability.

The review of Fielmann (FIE.DE) shows that it has a history of paying dividends since 2001 up to 2022, with the exception of 2023 where no dividends were issued. This indicates a 22-year streak which, while impressive, falls three years short of the 25-year criterion. Such a historical commitment to returning capital to shareholders reflects positively on the company’s financial health and shareholder-friendly policy. However, the sudden absence of a dividend in 2023 could raise red flags that need to be further investigated, such as potential financial difficulties or reallocation of funds for strategic purposes.

Reliable Stock Repurchases Over the Past 20 Years?

Analysis of a company's stock repurchase patterns is vital as it often reflects the management's confidence in the business. By repurching shares, a company reduces the number of shares outstanding, which can increase earnings per share (EPS). It thus suggests the company believes its shares are undervalued.

Analyzing Fielmann's stock repurchase history over the past 20 years reveals several critical points. Firstly, the company's number of shares outstanding changed slightly, beginning with 84,000,000 in 2003 and ending at 83,994,000 in 2023. This marginal decline represents an average repurchase rate of -0.0003 per year. Importantly, these stock repurchase activities make occasional appearances, notably in the years 2007, 2013, 2015, 2016, 2018, 2022, and 2023. However, we must note that while repurchases did occur in specific years, the repurchase rate remains notably low, with the count of shares consistently around 84 million. Such trends suggest a targeted, though not aggressive, repurchase strategy. Considering this, we can conclude that the repurchase pattern was reliable but not substantial, signifying moderate managerial confidence in boosting shareholder value. This stable but modest trend is positive but could be viewed as conservative.