Last update on 2024-06-27

IDEX (IEX) - Dividend Analysis (Final Score: 6/8)

Comprehensive analysis of IDEX (IEX) dividend stability using an 8-criteria score. Final rating: 6/8. Explore yield performance, growth, coverage, and repurchases.

Short Analysis - Dividend Score: 6

We're running IDEX (IEX) 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

IDEX (IEX) has shown varying dividend yields over the past 20 years with values ranging from 0.8971% to 1.9876%. Currently, the dividend yield stands at 1.1607%, which is lower than the industry average of 1.57%. This trend is generally unfavorable as a lower dividend yield can indicate that IDEX's stock may not be as attractive to income-focused investors compared to its industry peers. Investors may want to explore whether IDEX is reinvesting earnings into growth opportunities as an alternative reason for lower dividend yields. The historically lower dividend yield, most years below industry averages, also aligns with a robust stock price growth trajectory of over 1000% from $18.4844 in 2003 to $217.11 in 2023, indicating potential capital appreciation overshadowing dividend yields.

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

The Dividend Growth Rate gives investors an idea of how much the dividend payment has increased over time. A rate higher than 5% typically suggests healthy earnings growth and a commitment to returning value to shareholders. It's an important metric because consistent growth at this rate may indicate the company's profitability and stability.

The dividend growth rate for IDEX (IEX) can be understood from the given data. A cursory glance at the numbers shows fluctuations, with a mix of significant increases and decreases. Specifically, the years 2003, 2006, 2009, and 2020 show low or zero dividends, which may indicate financial difficulty. From 2010 to 2021, it is notable that the dividend rate remained relatively stable, averaging around 11.8377 - much higher than the baseline 5% threshold in many years. However, substantial dips in 2019 (-68%), 2020 (-77%), and 2021 (-46%) suggest some volatility. Overall, while several years saw growth exceeding 5%, the inconsistency and downticks reveal potential issues. Investors should remain cautious.

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

The payout ratio measures the proportion of earnings a company distributes as dividends to shareholders.

Based on the data provided, Idex Corporation (IEX) has maintained an average payout ratio of approximately 37.43% over the past two decades. This is significantly below the threshold of 65%, indicating a conservative approach to dividend payouts. Such a trend is favorable as it suggests that the company retains a considerable portion of its earnings for reinvestments and sustainable growth, while still rewarding its shareholders. Notably, in 2012, there was an anomaly with the payout ratio reaching 171.15%, potentially due to a temporary dip in earnings or a special dividend. Overall, the lower average payout ratio points to prudent financial management and a healthy balance between rewarding shareholders and fueling future growth.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings, meaning that the company should generate enough earnings per share (EPS) to comfortably pay out the dividends it promises. This is important because it indicates financial health and sustainability in dividend payments.

IDEX (IEX) has maintained a generally healthy coverage ratio of dividends to earnings over the years. A consistently low ratio is favorable as it means earnings comfortably cover the dividends. From 2003 to 2023, ratios ranged from approximately 0.209 to 0.400, indicating robust coverage. Notably, 2012 had an anomalous ratio of 1.71 due to a significant drop in EPS that year, but subsequent recovery trends indicate re-strengthening of coverage. Most recent years hover between 0.3-0.4, suggesting a good balance between rewarding shareholders and maintaining sufficient earnings for other uses.

Dividends Well Covered by Cash Flow?

This criterion assesses whether a company's free cash flow is ample enough to cover its dividend payments. A higher ratio indicates better coverage.

IDEX (IEX) exhibited a favorable trend of dividend coverage by free cash flow over the years 2003 to 2023. In 2003, the ratio was approximately 0.20 and steadily maintained levels above 0.20, reaching a peak of about 0.36 in 2022. This indicates that IDEX has consistently generated sufficient free cash flow to comfortably cover its dividend payments. This is a positive indicator as it reflects the company's financial stability and its potential to sustain dividend payouts. In particular, the continued upward trajectory into the higher ratios in recent years bolsters investor confidence in the robustness of the company’s cash generation potential.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over 20 years indicate the company's consistent ability to generate reliable cash flows, which is crucial for income-focused investors seeking predictable returns.

IDEX (IEX) has demonstrated commendable stability in its dividend payments over the past 20 years, with no significant drops of 20% or more. On the contrary, the data reveals a consistent upward trend: from $0.2489 per share in 2003 to $2.52 per share in 2023. This represents an increase of approximately 910% over two decades, reflecting robust financial management and resilience. The fact that the dividend per share has steadily climbed—without interruption—signals strong company performance and reliable cash flow generation, making IDEX a solid choice for dividend-focused investors.

Dividends Paid for Over 25 Years?

Explanation why dividends paid over a span of more than 25 years is an important criterion to consider for investors.

IDEX (IEX) has been paying dividends for the past 26 years consistently, from 1998 to 2023, with the annual dividend per share progressively increasing from $0.24 in 1998 to $2.52 in 2023. Such a sustained and rising dividend trend is indicative of the company's robust financial health and commitment to returning value to its shareholders. The continuous rise in dividend payouts is a strong signal of ongoing profitability and prudent management, making it an attractive investment option for dividend-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Stock repurchases, also known as buy backs, reduce the number of outstanding shares and can increase earnings per share. Analyzing these over a long period shows if the company favors this practice.

IDEX (IEX) has exhibited a noteworthy trend in stock repurchasing over the past 20 years. The company reduced its number of shares from 74,958,750 in 2003 to 75,600,000 in 2023, but with significant reductions during specific years. Notable repurchase years include 2009, 2013, 2014, 2015, 2016, 2019, 2022, and 2023. These reductions have positively influenced the EPS by limiting the share count, aligning shareholder interests positively through capital returns. This trend signifies healthy financial flexibility and a shareholder-friendly approach, which can enhance investor confidence. The average repurchase of 0.0577 highlights a deliberate strategy, albeit modest in scale, focused on value creation for long-term shareholders. This practice over two decades indicates reliability in share repurchasing, aiming at maximizing shareholder wealth. Therefore, IEX shows a robust and reliable stock buyback program that bodes well for its dividend policy and overall financial health.