Last update on 2024-06-28

Fox (FOX) - Dividend Analysis (Final Score: 5/8)

Fox (FOX) dividend analysis scores 5/8 based on stability and growth. A comprehensive assessment for dividend-focused investors.

Short Analysis - Dividend Score: 5

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

In this analysis, we looked at eight key criteria to judge Fox (FOX)'s ability to distribute dividends to its shareholders. Here's what we found: 1. Dividend Yield: Fox's current yield is 1.8445%, below the industry average of 2.78%. This means Fox may not be great for investors who seek high returns just from dividends. 2. Dividend Growth Rate: Dividends have rapidly risen since 2019, but were absent before then. This shows growth but also instability. 3. Average Payout Ratio: Fox has a payout ratio of about 4.95%, which is well below the 65% threshold, suggesting good financial health. 4. Earnings Coverage: Fox's dividends are better covered by earnings in recent years but still not fully. Caution is advised. 5. Cash Flow Coverage: This part wasn’t detailed, but usually, steady cash flow coverage is vital for sustainable dividends. 6. Stable Dividends: Dividends were zero until 2018, then rose steadily, showing recent stability but historical inconsistency. 7. Dividend History: Fox has been paying dividends only since 2019, far short of the ideal 25 years, which might worry long-term investors. 8. Stock Repurchases: Only recent buybacks since 2020, indicating a new but growing commitment to shareholders.

Insights for Value Investors Seeking Stable Income

Although Fox (FOX) has made significant improvements in its dividend policies in the last 5 years, it hasn't been paying dividends long enough or high enough compared to the industry to be a top choice for dividend-focused investors. The company shows good financial health through its low payout ratio and improving earnings coverage, but the historical instability and short dividend payment history could be a red flag. It might be worth monitoring Fox for future growth, but for now, there could be better options if you seek reliable and high dividends.

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 is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is an important indicator for investors seeking regular income from their investments. Companies with higher dividend yields may be more attractive to these income-focused investors.

Fox's current dividend yield stands at 1.8445%, which is below the industry average of 2.78%. Assessing Fox's dividend yield over the past 20 years, a clear upward trajectory is visible. The dividend yield has increased from virtually zero before 2019 to its current level. This steady increase, culminating in the current 1.8445%, is indicative of the company's concerted efforts to return more value to its shareholders. However, it is essential to juxtapose this performance with the broader industry's trend. The industry's average dividend yield indicates considerable volatility, especially notable with the anomalous yield spike in 2008. Despite these fluctuations, the industry's average in recent years has hovered around higher percentages, with 2.78% marking the present benchmark. Consequently, while Fox's dividend trend is commendable for its consistency and growth, it still falls short of the industry's average, making it less enticing for yield-focused investors in comparison. Another point of interest is Fox's stock price, which has seen fluctuations but no substantial long-term appreciation. For instance, the stock price closed at $36.4 in 2019 and is currently at $27.65. Despite the consistent dividend per share growth from 0.46 in 2019 to 0.51 in 2023, the capital appreciation has been somewhat subdued. In essence, Fox's increasing dividend yield is a positive trend but still doesn't measure up to the industry average, which might deter strict yield-seeking investors.

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

Dividend Growth Rate is the annualized percentage rate at which a company's dividends increase over time. It is important because it indicates the company's return on investment for shareholders and its financial health.

Evaluating the dividend data for FOX, we can see that from 2003 to 2019, the dividend ratio remained 0. A drastic increase in dividends occurred only in 2019, with dividends per share jumping to 2.1739 and subsequently rising to 4.2553 in 2022 before slightly decreasing to 4.0816 in 2023. While the immediate percentage increase from 2019 to 2023 exceeds a 5% annual growth rate, the historical context of having no dividends prior to 2019 suggests instability. Therefore, while the recent trend appears positive, the lack of consistency suggests caution.

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

The Average Payout Ratio is a measure of how much of a company's earnings are distributed to shareholders in the form of dividends. A ratio under 65% is generally considered healthy as it indicates the firm is retaining enough earnings to reinvest in growth or handle unexpected expenses.

Fox's Average Payout Ratio over the past 20 years stands at approximately 4.95%, substantially below the 65% threshold. This information is crucial because a lower payout ratio often suggests that a company is in a good position to maintain or grow its dividend payments in the future. For Fox, the consistently low payout ratio—specifically zero from 2003 to 2018 and just minimally increasing afterward—suggests very conservative financial management and ample room for potential dividend increases without jeopardizing the firm's financial stability. Hence, the trend is decidedly positive for this criterion, reinforcing Fox's strong fiscal prudence concerning dividend distribution.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. This criterion examines whether the company's earnings per share (EPS) is sufficient to cover its declared dividends per share. A ratio above 1 indicates that the company generates enough earnings to support its dividend payments, reflecting financial stability and potentially sustainable dividends in the future.

Over the past few years, we can observe that from 2017 to 2023 Fox's EPS increased, but dividends only started being covered by earnings in 2019. Initially, in 2017 and 2018, the cover ratio was quite alarming at zero. However, by 2019, with EPS at $2.5684 and dividends at $0.46, the coverage ratio improved to approximately 0.179. This upward trajectory was sustained, reaching a coverage ratio of around 0.218 by 2023, with EPS at $2.3422 against dividends of $0.51. While there is improvement, the current ratio of around 0.218 indicates that dividends are not fully covered by earnings. Therefore, from 2019 to 2023, the improvement in the ratio is promising but still suggests caution.

Dividends Well Covered by Cash Flow?

Explain the criterion for Fox (FOX) and why it is important to consider

Investors often look at whether the company's dividends are well covered by cash flow. This entails examining if the company's free cash flow comfortably exceeds its dividend payments, guaranteeing that dividends are sustainable even during periods of financial difficulty. Sustained positive free cash flow is also an indicator of strong financial health.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are crucial for assessing a company's ability to generate steady income for shareholders. These payments should not fluctuate significantly over time, ensuring reliable cash flows for investors.

Reviewing Fox's dividend payments over the past 20 years reveals an extensive period of zero dividends until 2018, followed by small incrementations starting at $0.46 per share and reaching $0.51 in 2023. A notable point of consideration is the stability in these numbers; there haven't been dips greater than 20% after 2018. However, the long duration of zero dividends can be alarming for income-focused investors, while the small, upward trend in recent years is a potential sign of growing fiscal health. Thus, Fox showcases a mixed history—flat for a long time but reliably growing in the last five years.

Dividends Paid for Over 25 Years?

A history of paying dividends over 25 years demonstrates financial stability, strong cash flow, and a commitment to returning value to shareholders.

The data reveals that Fox (FOX) did not pay any dividends from 2000 to 2018. The company began paying dividends in 2019 and has consistently increased its dividend payouts since then. Currently, in 2023, the dividend stands at $0.51 per share. Though the trend of increasing dividends is favorable, the company has not met the criterion of paying dividends for over 25 years. This suggests that Fox is relatively new to dividend distributions, which might cause apprehension for income-focused investors who seek long-term reliability in dividend payments.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company’s commitment to returning value to its shareholders. It reduces the number of outstanding shares, increasing earnings per share and potentially boosting share prices.

Over the last 20 years, Fox only demonstrated stock repurchases in the last 4 years (2020 to 2023). Before 2020, the number of shares remained unchanged. This recent trend is favorable, showing an average share reduction rate of approximately -0.7742%. However, the lack of consistent repurchases over the entire period suggests that stock buybacks have not been a significant strategic focus until recently.