Last update on 2024-06-27
Bilfinger (GBF.DE) - Dividend Analysis (Final Score: 6/8)
In-depth dividend policy analysis of Bilfinger (GBF.DE) with a scoring system to evaluate performance and stability. Final Score: 6/8.
Short Analysis - Dividend Score: 6
We're running Bilfinger (GBF.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.
Bilfinger (GBF.DE) scored a 6/8 based on the 8-criteria dividend scoring system. The company has a significantly higher dividend yield than the industry average, around 5.6002%, which is appealing to income-seeking investors. Despite having an impressive average annual dividend growth rate of 15.24% over twenty years, the dividend growth is highly inconsistent, with multiple years showing zero or negative growth. However, the average payout ratio is low (32.5548%), indicating sustainable dividend payments. The dividends are somewhat well-covered by earnings and recent years show dividends covered by cash flow, although historical inconsistencies exist. Bilfinger's dividend history shows fluctuation without dropping more than 20%, which is positive but concerning due to sharp drops in some years. The company has also engaged in reliable stock repurchases, though the pattern involves gaps. Overall, Bilfinger demonstrates both strengths and vulnerabilities in its dividend practices.
Insights for Value Investors Seeking Stable Income
Despite its weaknesses, Bilfinger (GBF.DE) could be a worthwhile consideration for dividend-focused investors who value high yield and the potential for income. However, the inconsistent dividend growth and coverage might be a concern for conservative investors seeking steady returns. If you’re a potential investor, careful consideration of the financial stability and monitoring for consistent improvement is advisable.
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 refers to the ratio of a company's annual dividend compared to its share price, expressed as a percentage. A higher yield indicates higher income for investors relative to the stock price. It is important as it gives insight into the income-generating potential of an investment.
Bilfinger's (GBF.DE) dividend yield of 5.6002% is significantly higher than the industry average of 2.27%. Historically, Bilfinger's dividend yield has fluctuated, ranging approximately from 1.3669% to 13.8479% over the past 20 years. Comparing to industry averages, Bilfinger's yield has consistently outperformed, particularly in recent years, suggesting that the company has managed to maintain relatively high payouts. This high yield can be appealing to income-seeking investors. However, it may also indicate a lower stock price which could be a sign of market concerns about the company. Given the consistently higher yields compared to the industry, the current trend can be seen as positive for dividend-focused investors but might need consideration from a total return perspective.
Average annual Growth Rate higher than 5% in the last 20 years?
Dividend Growth Rate in the last 20 years measures the average annual growth of Bilfinger's dividend. A higher rate signals that the company has consistently improved its dividend payouts, which can be attractive to income-focused investors.
Based on the provided data, the average dividend growth rate for Bilfinger over the last 20 years is approximately 15.24%. If we look at individual yearly growth rates, we see a significant fluctuation, ranging from -75% to 100%. This indicates a highly variable dividend policy, which could be challenging for investors looking for steady income. Particularly, in several years (e.g., 2006, 2010, 2012, 2014, 2016, 2018, and 2019), the dividend growth rate was zero or negative, suggesting either cuts or pauses. Despite an overall impressive average growth rate of over 15%, which is well above the 5% benchmark, the inconsistency could be a concern for long-term dividend reliability. Therefore, while the average growth is good from a numerical standpoint, the variability introduces risk that might offset the attractiveness of the average figure.
Average annual Payout Ratio lower than 65% in the last 20 years?
The payout ratio measures the proportion of earnings a company pays to shareholders in the form of dividends. It is a critical metric to assess whether the company generates enough profits to sustainably pay dividends. A consistently low payout ratio suggests the company reinvests earnings into growth while maintaining dividend payments, reducing risk of overextension.
Bilfinger (GBF.DE) has maintained an average payout ratio of 32.5548% over the last 20 years, significantly lower than the 65% threshold. This trend is favorable as it indicates the company's cautious approach to dividend payments, focusing on sustainability. There are years with unusual spikes and negative values (e.g., 2022 at 526.8334, 2015 at -185.5747), but these outliers are effectively balanced out by lower payout ratios in other years. The overall low average suggests that Bilfinger prioritizes financial stability and reinvestment into the company over immediate shareholder returns, reducing the risk of future dividend cuts or financial strain.
Dividends Well Covered by Earnings?
Dividends are well covered by the earnings.
Earnings per share (EPS) reflect a company's profitability on a per-share basis and are calculated by dividing net profit by the number of outstanding shares. A fundamental criterion for a sustainable dividend policy is that dividends should ideally be well-covered by earnings to ensure that the company isn't over-distributing its profits. The coverage ratio (EPS divided by Dividends per Share) gives an insight into whether the firm’s earnings are sufficient to cover its dividends. For Bilfinger (GBF.DE), examining the historic Dividend and EPS data from 2003 to 2023, we can see some critical trends. The company experienced variability in EPS with certain years like 2015 and 2017 showcasing negative earnings (-11.0581 and -2.0125, respectively), suggesting operational challenges. However, 2021 and 2023 (EPS of 3.1861 and 4.8449) demonstrated recoveries. The dividend coverage ratio varied widely across years, which indicates inconsistency; years with ratios under 1 indicate dividends were not covered by earnings, thus posing risks. A coverage ratio above 1, such as in 2019 and 2023 (ratios of 1.6647 and 0.4025), on the other hand, indicates healthier dividend sustainability when these ratios are much above 1. Observing these values, it is clear Bilfinger requires improving earnings consistency to ensure reliable dividend coverage.
Dividends Well Covered by Cash Flow?
Dividends well covered by cash flow indicates that a company generates enough free cash flow to cover its dividend payouts. It is important because it shows the sustainability of dividend payments without resorting to debt or reducing cash reserves.
From 2003 to 2007, Bilfinger did not pay any dividends despite having positive free cash flow in most of these years. Starting in 2008, we notice the introduction of dividend payouts. The coverage ratios from 2008 to 2011 are somewhat unstable but are above 1 in 2011, indicating dividends were covered by cash flow. However, severe negative coverage ratios in 2012 and 2013 (-2.45 and -4.26 respectively) suggest that dividends were not at all covered by cash flow, leading to potential sustainability issues. Similarly, 2015 and 2016 (-4.86 and -0.28 respectively) show dire coverage. More recently, the data shows improvements, with net positive coverage since 2019. The noteworthy peak in 2019 (2.76) and an increasing trend up to 2022 (1.82) indicate a healthier financial situation. In conclusion, while Bilfinger has had challenges in maintaining a sustainable dividend policy, recent trends suggest improvement. This is a positive indicator for investors focusing on dividend sustainability.
Stable Dividends Since the Company Began Paying Dividends?
Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is paramount for income-seeking investors. It provides a reliable income stream and reflects management's commitment to returning value to shareholders.
The dividend history of Bilfinger (GBF.DE) over the last 20 years showcases both strengths and weaknesses when assessing stability. Despite some fluctuations, the dividend per share did not drop by more than 20% in any given year, according to the provided data. This is a positive sign for income-seeking investors looking for reliable returns; however, the significant drop from 3 per share in 2014 to 0.5 in 2016 is a notable exception to this general trend. Additionally, the year 2018 where the dividend was reduced to 0.5 indicates inconsistency. While the later recovery, peaking at 3.75 in 2022 shows resilience, this overall pattern may still be concerning for conservative investors focused on dividend stability. These trends exhibit both the resilience and volatility of Bilfinger's dividend policy.
Dividends Paid for Over 25 Years?
Explain the criterion for Bilfinger (GBF.DE) and why it is important to consider
Dividends Paid for Over 25 Years? This criterion identifies whether the company has had a consistent policy of returning cash to shareholders over a long period, which is an indicator of financial stability and shareholder friendliness.
Reliable Stock Repurchases Over the Past 20 Years?
Reliable stock repurchases refer to the regular buyback of a company’s own shares from the marketplace, typically an indicator of the management's confidence in the company's prospects and a tool to enhance shareholder value.
Over the past 20 years, Bilfinger (GBF.DE) has demonstrated instances of reliable stock repurchases in eight years: 2008, 2009, 2011, 2017, 2018, 2019, 2022, and 2023. The average stock repurchase rate over these two decades stands at 0.1218. Particularly, culprits like 2008 and 2009 indicate actions in turbulent financial times, demonstrating strategic financial maneuvers to potentially either boost investor confidence or take advantage of lowered share prices. A consistent repurchasing approach is generally perceived as a positive trend as it indicates confidence and an effective capital allocation strategy. However, the gaps in the repurchasing years indicate potential inconsistencies that investors should be aware of. Overall, while the average repurchase rate of roughly 12.18% is healthy, the sporadic pattern suggests careful monitoring moving forward.
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