Last update on 2024-06-28

Inmobiliaria Colonial SOCIMI (HSC2.F) - Dividend Analysis (Final Score: 2/8)

Assess the dividend performance and stability of Inmobiliaria Colonial SOCIMI (HSC2.F) with our in-depth 8-criteria scoring system, revealing areas for growth.

Short Analysis - Dividend Score: 2

We're running Inmobiliaria Colonial SOCIMI (HSC2.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Inmobiliaria Colonial SOCIMI's (HSC2.F) dividend analysis was based on an 8-criteria scoring system, resulting in a low score of 2. The individual criteria reveal some concerns: 1. **Dividend Yield**: It is 3.811% but lower than the industry's average of 6.18%. 2. **Dividend Growth Rate**: Historical data shows fluctuations and an overall negative growth rate, indicating instability. 3. **Payout Ratio**: Extremely high average of 738.49%, with alarming volatility, suggesting financial instability. 4. **Coverage by Earnings**: Inconsistent, casting doubt on dividend sustainability. 5. **Coverage by Cash Flow**: Mixed, showing improvement until 2022, but zero values in 2023. 6. **Stability Since Dividends Began**: Although dividends have grown since 2017, there was a significant dropout in 2017. 7. **Dividend Payment History**: Not consistent over 25 years, with a record only since 2016. 8. **Stock Repurchase**: Inconsistent, indicating less focus on returning value through buybacks.

Insights for Value Investors Seeking Stable Income

Given the low performance in the 8-criteria analysis, investors may want to be cautious. The fluctuating dividend yields, high payout ratios, inconsistent earnings coverage, and lack of long-term dividend payment history are significant red flags. Although there are recent improvements in dividends, the overall instability and financial inconsistencies suggest that Inmobiliaria Colonial SOCIMI (HSC2.F) might not be the best choice for investors seeking reliable and robust dividend income. Therefore, it might be worth considering other, more stable companies within the industry for better income potential and investment security.

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?

The dividend yield indicates how much a company pays out in dividends each year relative to its stock price. It's an important measure for assessing the income-generating potential of an investment.

The dividend yield for Inmobiliaria Colonial SOCIMI (HSC2.F) over the last few years has seen an upward trend, ending at 3.811% in 2023. However, compared to the industry average, which stands at 6.18% for 2023, the company's dividend yield is significantly lower. Analyzing the historical data, the company's dividend yield was exceptionally high at 19.7368% in 2016, but there were fluctuations, including a zero yield in 2017. Since then, the yield has consistently increased, indicating a gradual recovery and improvement in dividend payouts. Conversely, the industry average has been relatively stable but consistently higher. The lower dividend yield of Inmobiliaria Colonial compared to the industry average suggests that investors might prefer other companies within the industry for higher dividend income. However, the increasing trend in the company's dividend yield signals potential future growth in dividends, aligning with a rising stock price from 6.04 in 2022 to 6.56 in 2023 and a consistent increase in dividend per share from 0.24 in 2022 to 0.25 in 2023. Hence, while the current dividend yield may not be competitive, the positive trend indicates the company's efforts to enhance shareholder returns over time, making it an attractive option for long-term investors.

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

The Dividend Growth Rate assesses the annualized percentage rate of growth of a company's dividend payouts, typically over a long period (e.g., 20 years). It reflects the company's commitment and ability to increase dividends regularly, which can attract income-focused investors.

The dividend ratios for Inmobiliaria Colonial SOCIMI (HSC2.F) in the years 2016 through 2023 present a fluctuating pattern with some years (2017 and 2022) showing a negative growth rate. Specifically, the years 2016, 2018, and 2020 recorded no dividends. In 2019, there was a significant growth rate of 11.1111%, which then dropped in the subsequent years: 10.0025% in 2021 and 4.1667% in 2023. Given an average dividend ratio of -8.2036%, it is clear that over this period, there’s an overall decline in dividends rather than growth. This trend does not meet the desirable threshold of a steady 5% annual growth rate. Hence, from this data, the overall dividend growth for the company is significantly poor and unstable, reflecting potential concerns regarding its dividend sustainability and growth, thereby potentially deterring income-seeking investors.

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

Assessing the average payout ratio over the last 20 years is critical as it evaluates the sustainability of dividends. A lower ratio suggests the company retains more profit for growth.

The average payout ratio of Inmobiliaria Colonial SOCIMI over the provided years is a staggering 738.49%, which is substantially above the 65% threshold. The data reveals extreme volatility, with a particularly notable peak in 2020 at 4254.28%, while several years report a 0% payout. This high average and volatility are significant concerns, indicating potential financial instability and inconsistent dividend policies. Ideally, a lower and more stable payout ratio would be favorable for sustained investor confidence and company growth.

Dividends Well Covered by Earnings?

Dividends being well covered by the earnings means that the company generates enough earnings to not only pay out dividends comfortably but also retain some earnings for potential reinvestments or to buffer against future downturns.

The trend of Earnings per Share (EPS) and Dividend per Share (DPS) for Inmobiliaria Colonial SOCIMI (HSC2.F) exhibits a concerning pattern. Between 2016 and 2023, EPS has shown significant volatility, ranging from maximums in 2017 and 2019 (1.5834 and 1.6286 respectively) to values as low as 0 in both 2016 and 2023. Conversely, DPS has been relatively consistent with a slight upward trend over the years, increasing from 0.15 in 2016 to 0.25 in 2023. When comparing EPS to DPS, the Dividend per Share covered by the Earnings per Share ratio has shown extreme fluctuations. A notable observation is the drastic cover in 2020 (42.55), which suggests EPS significantly exceeded DPS. However, values closer to zero or massive redundant figures (e.g., The 16 cover in 2022 and 0 in 2016, 2023) raise concerns about the sustainability of such dividend payments. Overall, this inconsistency in earnings coverage negatively impacts the confidence in dividend stability for investors.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow is crucial as it indicates the ability of a company to sustain its dividend payments without compromising its financial health.

For Inmobiliaria Colonial SOCIMI (HSC2.F), the trend in free cash flow (FCF) coverage of dividends is mixed. In 2017, the FCF dividend coverage was low at 0.26, meaning cash flow just about covered the dividends. This improved to roughly 0.46 in 2018 and witnessed further fluctuations, peaking in 2022 at approximately 0.68. Despite the growth, the latest figures for 2023 show both FCF and dividends at zero, which might require closer scrutiny. The upward trend from 2017 to 2021 and a peak in 2022 shows an improving scenario before the abrupt change in 2023, suggesting a moderately positive outlook until recently.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are essential because they provide a reliable income stream and indicate financial health.

The dividend data for Inmobiliaria Colonial SOCIMI (HSC2.F) for the past eight years shows a positive trend overall. However, there was an anomaly in 2017 when the dividend per share dropped to zero. Despite this, since then the dividends have shown continuous growth from €0.18 in 2018 to €0.25 in 2023. This trend is good as it reflects the company’s improving financial health and commitment to returning value to shareholders. Nonetheless, income-seeking investors should take note of the drop in 2017, which represents a significant disruption in otherwise increasing dividend payments.

Dividends Paid for Over 25 Years?

Examining whether a company has paid dividends consistently for over 25 years provides insights into its financial stability and shareholder value commitment.

This data shows that Inmobiliaria Colonial SOCIMI (HSC2.F) has not consistently paid dividends for over 25 years, as we only have dividend records from 2016 to 2023. Moreover, there was a year (2017) with no dividend payment. However, the trend appears to be positive overall, with steady increases in dividends per share from 2018 to 2023, reaching 0.25 EUR in 2023. Although it is a good sign that the company is increasing dividends, the lack of a long-term dividend history and consistency might be concerning for some investors. Therefore, this trend is mixed, showing recent positive actions but lacking the longevity that some might prefer.

Reliable Stock Repurchases Over the Past 20 Years?

Examining the history of stock repurchases helps assess a company's commitment to returning value to shareholders. It demonstrates confidence in its future earnings and a well-capitalized balance sheet.

Inmobiliaria Colonial SOCIMI's history of stock repurchases over the past 20 years shows a rather inconsistent pattern. From the data provided, it appears that 2020 is the only reliable repurchased year over two decades. Furthermore, the average repurchase pace is only 3.2012. The number of shares significantly increased from 431,037,416 in 2017 to 531,429,000 in 2022, which indicates potential share dilution rather than repurchasing. This trend is concerning for investors seeking companies with a consistent record of reducing their share count, as it could imply less focus on returning value to shareholders through stock buybacks.