Last update on 2024-06-27

Fuchs Petrolub (FPE3.DE) - Dividend Analysis (Final Score: 4/8)

Analyze Fuchs Petrolub's (FPE3.DE) dividend performance and stability with an 8-criteria scoring system. Learn in-depth insights about dividend policy and investment appeal.

Short Analysis - Dividend Score: 4

We're running Fuchs Petrolub (FPE3.DE) 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 indicates the annual dividend income per dollar invested. It is essential to compare with industry average to assess attractiveness.

Fuchs Petrolub's current dividend yield of 2.6551%, which stands above the industry average of 2.37%, indicates a more attractive dividend income relative to its peers. Over the last 20 years, the company's yield has generally been volatile, peaking significantly in 2003 at 201.6529%. However, recent years have shown a more stable and consistent pattern, hovering around 2-3.5%. The stock price has appreciated significantly, from €2.42 in 2003 to €40.3 in 2023, demonstrating capital gain potential. The consistency and competitive yield make Fuchs Petrolub's dividends appealing in the current market context, reinforcing a positive trend.

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

A Dividend Growth Rate above 5% annually over a sustained period indicates the company's ability to consistently increase shareholder value through dividends.

Fuchs Petrolub (FPE3.DE) exhibits an average annual Dividend Growth Rate of 3.76% over the last two decades, which falls short of the 5% target. Analyzing the individual years, there's significant volatility, with numerous years showing negative growth rates. Notably, from 2008 to 2011 and in 2016, the growth rates either peaked or dived wildly (e.g., -63.388% in 2006 and 116.8831% in 2016), indicating instability. Such fluctuations could embellish underlying challenges in sustaining consistent dividend payments or could be responses to broader economic factors. Generally, this trend is negative for dividend-focused investors who prioritize stable and predictable income growth.

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

Average Payout Ratio lower than 65% in the last 20 years evaluates the company's efficiency in managing and distributing profits as dividends. This ratio's significance lies in its impact on sustainability and growth potential.

The payout ratio for Fuchs Petrolub over the last 20 years shows an average of 230.57%, which is significantly higher than the desired threshold of 65%. Moreover, the yearly payout ratios demonstrate extreme volatility and very high figures in initial years, such as 2135.67% in 2003 and 627.49% in 2004, indicating special circumstances or one-time payouts. For years after 2010, the payout ratio normalizes and remains below the 100% mark, with the lowest recorded at 43.92% in 2018. This trend is mixed – while the initial high payouts could be dismissive as outliers, the recent ratios suggest improved management. The average, however, is unsatisfactory, reflecting a significant chunk of earnings being distributed as dividends, potentially limiting reinvestment into the company for future growth. Therefore, from an investor’s perspective, the high average payout ratio is unfavorable even though recent trends are more stable.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

The coverage ratio of dividends by earnings is a crucial indicator of a company's financial health and its ability to sustain dividend payouts. A higher ratio suggests that a company's earnings are sufficient to cover its dividend commitments, reducing the risk of dividend cuts during economic downturns. For Fuchs Petrolub (FPE3.DE), the given data show that the coverage has significantly decreased over the years. For instance, in 2003, the earnings per share (EPS) covered the dividends per share more than 21 times. However, this ratio has diminished rapidly over the years, with recent values suggesting that only about half of the dividends are covered by earnings (e.g., a ratio of 0.55 in 2023). This declining trend indicates a weakening ability to cover dividends through earnings alone, which could signify potential financial stress or an over-reliance on external financing to maintain dividend payouts. Investors should be cautious and monitor this trend closely, as a continuous decline in coverage ratio might lead to unsustainable dividend policies or potential dividend cuts in the future. It is essential for the company to either improve its earnings or reconsider its dividend payout strategy to maintain financial stability.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

The Dividend Well Covered by Cash Flow ratio illustrates the extent to which a company's free cash flow can comfortably cover its dividend payouts. This metric is crucial as it helps assess the sustainability of a company's dividend policy. A higher ratio indicates that the company has ample free cash flow to support its dividends, thereby reducing the risk of dividend cuts and enhancing shareholder confidence.

Stable Dividends Since the Company Began Paying Dividends?

Magnitude of dividend drop

Given the data on Fuchs Petrolub over the past 20 years, the dividend per share shows an inconsistent trend with significant variability at different points. For instance, in 2015, the dividend was 0.77, a drop exceeding 20% from 2014's 1.4. Additionally, in 2018, the dividend dropped to 0.91 from 2017's 0.89, indicating fluctuations. Stability in dividend payments is crucial for income-seeking investors as it reflects a company's consistent ability to generate cash flow, ensuring regular income for shareholders. Unfortunately, the drop in 2015 indicates a potential red flag for those prioritizing dividend stability, suggesting Fuchs Petrolub may not always provide the steadfast dividend growth income-focused investors seek.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years

Examining the year-over-year data for dividend per share from 2000 to 2023, we observe that Fuchs Petrolub has consistently paid dividends for each of these 24 years. The figures reveal variability in dividend payments, but the ongoing commitment highlights financial resilience and a shareholder-friendly policy. Should the trend continue into the next year, Fuchs Petrolub would meet the 25-year mark, solidifying its legacy as a dependable dividend-paying company. This trend is positive as it underpins the firm’s long-term commitment to sharing profits with shareholders, fostering investor trust and stability.

Reliable Stock Repurchases Over the Past 20 Years?

Criterion: Reliable Stock Repurchases Over the Past 20 Years. This criterion examines whether a company has consistently bought back shares over an extended period. Reliable stock repurchases can indicate a company's confidence in its financial health and its commitment to returning value to shareholders.

The data shows that Fuchs Petrolub has had multiple years where stock repurchases were conducted: 2007, 2008, 2009, 2010, 2013, 2014, 2015, 2022, and 2023. The trend indicates intervals of consistent buybacks, averaging to a repurchase rate of 0.2361 over the last 20 years. This signifies a healthy return of capital to shareholders and suggests a solid financial footing. Out of the 21 years, reliable repurchases were seen in 9 years which implies the buybacks are sporadic but still contribute positively to shareholder value. This trend can be considered good, albeit not exceptionally regular, suggesting managerial discretion in timing buybacks.