Last update on 2024-06-28

HELLA GmbH (HLE.DE) - Dividend Analysis (Final Score: 3/8)

Detailed dividend analysis of HELLA GmbH (HLE.DE) with an 8-criteria scoring system revealing a final score of 3/8, assessing dividend policy performance and stability.

Short Analysis - Dividend Score: 3

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

HELLA GmbH (HLE.DE) provides dividends, but its history is quite inconsistent. The dividend yield usually beats the industry average, but it's also higher out because of fluctuations over the years. The company's Dividend Growth attempts look good some years but don’t show a stable trend. HELLA has a low payout ratio and generally covers its dividends well with earnings, although there were years when it didn’t. Sometimes, the company struggles to cover dividends with cash flow. HELLA's dividends aren’t very stable and it's only recently started providing dividends steadily. It hasn’t been paying dividends for over 25 years, and HELLA doesn't have a history of stock buybacks to return value to shareholders.

Insights for Value Investors Seeking Stable Income

HELLA may not be the best choice if you’re looking for consistent dividends since it shows a lot of fluctuations and hasn't been paying for a long time. The high yield during some years might attract you, but the volatility could be worrying. Their financial health seems solid with a low payout ratio and decent earnings coverage, but the inconsistent dividend policy could be a red flag. It might be better to explore stocks with more reliable and stable dividend histories if you want steady income.

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 financial ratio that indicates how much a company pays out in dividends each year relative to its stock price. It is computed by dividing the annual dividends paid per share by the market price per share. A higher dividend yield indicates a potentially more attractive investment by providing steady income in the form of dividends. It's an important criterion in assessing the attractiveness of a company's stock to income-focused investors.

HELLA GmbH (HLE.DE) has a more attractive dividend yield of 3.1636% in comparison to the industry average of 2.23%. Over the past 20 years, HELLA's dividend yield has seen substantial fluctuation, with periods where no dividend was paid at all (e.g., up to 2014) and a significant peak in 2019 (4.6615%). The company's yield dropped to as low as 0.6443% in 2022 and has again risen to 3.1636% most recently. In the context of the industry, HELLA has often been above the industry average, which generally hovers below 2%. This higher yield is favorable, indicating HELLA’s willingness to return value to shareholders. However, the volatility in past yields might signal inconsistent dividend policies or market conditions that investors need to consider.

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

Dividend Growth Rate

The analysis of HELLA GmbH's Dividend Growth Rate over the last 20 years reveals considerable fluctuation, with specific years showing exceptional growth, while others demonstrate significant declines. For instance, the dividend per share ratio surged to 119.0476 in 2020 and skyrocketed to 432.6531 in 2023, which on the surface indicates tremendous growth in those years. However, the company has also experienced years with -100 and -48.9583, respectively, in 2020 and 2022. Such extreme variability results in an average dividend ratio of 24.24185, which indicates moderate, albeit inconsistent, growth over the years. The sporadic nature of these dividend payouts makes it difficult to conclusively affirm a stable upward trend that consistently exceeds the 5% growth rate. While years with exceptionally high ratios could be seen positively for short-term investors, the erratic trends may be a red flag for long-term investors seeking stability and predictability in dividends.

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

The payout ratio is the proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage. A lower payout ratio suggests that a company is retaining more of its earnings for growth and other purposes.

HELLA GmbH (HLE.DE) has an average payout ratio of 18.36% over the last 20 years, which is significantly lower than the 65% threshold. This trend indicates that the company has been conservative in distributing its earnings as dividends, retaining a larger portion for reinvestment into the business. Exceptional decisions might be around 2023, with a spike to 109.88%, suggesting either exceptional payout or a drop in earnings. Overall, this low average payout ratio is a positive indicator for the company's financial health and potential for sustainable growth.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

Analyzing the financials of HELLA GmbH (HLE.DE) from 2006 to 2023 with respect to dividend coverage by earnings per share (EPS) indicates a varied trend. In earlier years until 2010, the company did not distribute any dividends. From 2011 onwards, HELLA started to distribute dividends, which became well-covered particularly in specific years. For instance, 2015 showed that the dividends were covered by approximately 28.5% of the EPS, 2016-2018 ranged around an average of 30%, indicating moderate coverage. Importantly, during 2019 when HELLA's EPS surged to 5.67, the dividend coverage also saw an uptick to approximately 40.6%. However, in 2020, the company showed no dividends following a substantial negative EPS. After resuming dividends in 2021 and 2022, the coverage ratio balanced back to the lower 30% range. Notably, for 2023, the dividend coverage ratio impressively soared to around 109.8%, suggesting dividends were fully covered and even left additional earnings. This upward trend in coverage in 2023 is a positive indicator of HELLA’s financial health. Such higher dividend coverage ratios are typically reassuring for investors, signaling robust earnings can sustain dividend payouts and allow room for potential increases or stabilization during economic downturns.

Dividends Well Covered by Cash Flow?

Dividends well covered by operating cash flow ensures that the company generates sufficient cash to sustain its dividend payments, which is crucial for financial stability and shareholder trust.

An analysis of HEllA GmbH's free cash flow and dividend payout amounts from 2012 to 2023 reveals a fluctuating trend. The ratio of dividends covered by cash flow has varied considerably. For instance, in 2014 and 2015 (`2.88` and `0.95`, respectively) the company generated ample cash flow to cover dividends. In contrast, during periods like 2013 and 2017 (`-0.78` and `0.51`), there was insufficient cash flow, implying the company might have resorted to other means like borrowing or using reserves to maintain dividends. Such volatility can concern investors, emphasizing the importance of consistent cash flow generation to support sustainable dividends. Overall, with more years showing ratios above `1`, Hella demonstrates an ability to cover dividends through cash flow, most notably in 2023 with `1.68`, indicating a positive trend in recent years.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments is crucial for income-seeking investors as it provides predictability and reduces the risk associated with income streams. Specifically, a stable dividend policy can be a sign of a company's financial health and commitment to returning value to shareholders.

Analyzing HELLA GmbH's dividend per share over the past 20 years indicates that it hasn't had a steady history of dividend payments, especially in the earlier years (2006-2010), which displayed no dividend at all. The pivotal disruption came after 2019 when the dividend dropped sharply from 2.3 euros to zero in 2020. This represents much more than a 20% reduction, breaching the specified criterion. Since then, there have been fluctuating dividends with a noticeable rebound in 2023 to 2.61 euros. However, the inconsistency disqualifies HELLA from being classified as a stable dividend-paying entity over the extended period of analysis, making it less ideal for income-seeking investors.

Dividends Paid for Over 25 Years?

Dividends paid over 25 years is an indicator of the reliability and sustainability of a company's shareholder return policy. Companies that maintain a consistent dividend payout for such extended periods are often viewed as financially stable and investor-friendly.

HELLA GmbH (HLE.DE) has not consistently paid dividends for over 25 years, with notable gaps in its dividend history. According to the provided numbers, the company commenced dividend payouts effectively from 2015 at €0.77 per share, with intermittent interruptions, notably no dividends in 2020. The dividends have fluctuated, from €2.3 per share in 2019 to €0.49 in 2022, and then a spike to €2.61 in 2023. While the company has shown commitment to rewarding shareholders relatively recently, the inconsistency makes it less reliable from a long-term dividend sustainability perspective. Hence, based on this trend, HELLA GmbH's history does not pass the criterion for having paid dividends for over 25 years, limiting its attractiveness to income-oriented investors.

Reliable Stock Repurchases Over the Past 20 Years?

Examining reliable stock repurchases over the past 20 years helps gauge a company's commitment to returning value to shareholders and managing capital efficiently.

HELLA GmbH has shown no consistent share repurchases over the past 20 years, as indicated by the fact that there are no years marked as having 'reliable' repurchases. The average repurchased rate stands at 0.6399. This value is derived from the company's share count changes, which only show significant increases in the share count from 2006 to 2011 and stabilized in subsequent years. This suggests that HELLA has not utilized share buybacks as a strategy to enhance shareholder value effectively.