Last update on 2024-06-27

Intuit (INTU) - Dividend Analysis (Final Score: 6/8)

Intuit (INTU) Dividend Analysis: In-depth assessment of Intuit's dividend stability and performance using 8-criteria scoring system. Final Score: 6/8.

Short Analysis - Dividend Score: 6

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

The dividend analysis for Intuit (INTU) evaluates their policy using an 8-criteria scoring system. Intuit scored 6 out of 8. Here’s a breakdown of their performance: 1. **Dividend Yield**: Initially fluctuated from zero to 1.3%, currently stands at 0.5184% which is below the industry average of 0.79%. While low, the yield has grown to $3.24 per share, showing solid company profitability. 2. **Dividend Growth Rate**: Shows sustainable and consistent growth exceeding 5%, demonstrating a commitment to increasing shareholder returns. 3. **Payout Ratio**: Maintained well below 65%, averaging 21.83%, indicating adequate retention for reinvestment. 4. **Earnings Coverage**: Dividends are well covered by earnings, with a current payout ratio around 38.19%. Shows sustainable growth and strong financial stewardship. 5. **Cash Flow Coverage**: Not detailed in this summary. 6. **Dividend Stability**: Started in 2011; no drop exceeding 20%, slight fluctuation in 2021 showing stability with room for growth. 7. **25 Years of Dividends**: Intuit has paid dividends since 2011, showing a positive recent trend but not meeting the 25 years requirement. 8. **Stock Repurchases**: Reflects management’s confidence in the company. Ensures value return apart from dividends.

Insights for Value Investors Seeking Stable Income

Based on this analysis, if you're an investor interested in consistent and reliable dividend growth with strong potential for future hikes, Intuit seems promising. While they have only paid dividends since 2011 and their yield is currently below the industry average, the firm's consistent growth in dividends, low payout ratio, and commitment to returning shareholder value make it a solid candidate. It's worth considering for long-term investment as the trends indicate strong financial health and potential for continued growth in both dividends and stock value.

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

Evaluating Intuit's dividend yield, we notice it stands at 0.5184% for 2023. Over the last 20 years, Intuit's dividend yield has varied significantly, from 0% in early 2000s to peaks around 1.3% in 2011. More recently, the company’s yield has hovered below 1%. On the industry average front, the trend has also shown fluctuations with a recent uptick to 0.79%. The critical comparison here indicates that Intuit’s current yield is slightly below the industry average, suggesting that for those particularly focused on this metric, Intuit may not be as attractive as some peers. However, it's vital to see this in the broader context, as yield alone doesn't tell the full story. Positively, Intuit's dividend per share has steadily increased over time—from nothing to $3.24 in 2023, showcasing strong profitability and a robust ability to return capital to shareholders. Despite its lower yield, this steady growth could represent a signal of the company's financial health and a potential for future hikes in both dividends and stock price, rendering a more rounded understanding of shareholder returns.

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

Explain the criterion for Intuit (INTU) and why it is important to consider

The criterion for evaluating the Dividend Growth Rate is critical as it signifies the company's ability to consistently increase shareholders' returns over time. A higher growth rate, preferably beyond 5%, over a long period like 20 years shows sustainability and a commitment to delivering value to investors.

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

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

Intuit (INTU) has maintained a payout ratio well below the 65% threshold over the past 20 years, with the average payout ratio standing at approximately 21.83%. The payout ratio exceeded 65% only once in 2015, reaching 82.28%. This is considered a healthy trend as a lower payout ratio generally indicates that the company is retaining enough earnings to reinvest in its growth, while still returning value to shareholders through dividends. Maintaining a low payout ratio suggests that Intuit has managed its profits and dividends prudently. Moreover, with the highest payout ratio in recent years being considerably lower than the critical 65% mark, the company demonstrates a consistent capacity for sustainable dividend payments. This trend is positive as it enhances the financial stability and dividend reliability of Intuit.

Dividends Well Covered by Earnings?

Dividends being well covered by the earnings means that the company's earnings per share (EPS) should be significantly higher than the dividends per share (DPS). This ensures the company can sustainably pay dividends from its earnings without jeopardizing its financial health.

Examining Intuit's (INTU) financial data from 2003 to 2023, we observe that the Earnings Per Share (EPS) consistently increased over the period, reaching $8.484 in 2023 from $0.8131 in 2003. The Dividend Per Share (DPS) data reveals that dividends started in 2011. Since then, dividend payouts have risen from $0.15 per share to $3.24 per share in 2023. To determine if dividends are well covered by earnings, we can calculate the payout ratio (DPS/EPS). The data reveals a trend where dividends per share are well below earnings per share. For instance, in 2023, the payout ratio is approximately 38.19%, indicating that the dividends are well covered by the earnings, allowing room for reinvestments in growth or further dividend increases. Initially, between 2003 to 2010, no dividends were paid. Starting from 2011, the trend shows that the payout ratios oscillate but remain healthy, never surpassing 82.28% (2015), and mimimally at 7.5% (2011). Noticeably, in 2016 and onwards, from a ratio perspective, dividends per share relative to earnings per share have been maintaining an even keel below 40%, which portrays a strongly covered and sustainably growing trend, and reflects robust corporate financial management. Overall, the trend is positive, evidencing healthy financial stewardship and the capacity for increased earnings to support larger dividends while ensuring financial stability.

Dividends Well Covered by Cash Flow?

Explain the criterion for Intuit (INTU) and why it is important to consider

Dividends Well Covered by Cash Flow.

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 crucial for income-seeking investors.

Intuit (INTU) began paying dividends in 2011. Since then, the dividend per share has shown remarkable growth but experienced a drop of approximately 11.6% in 2021 (from $2.77 to $2.45). This does not meet the criterion of not dropping by more than 20%. Therefore, although the overall trend is positive and robust, there was a notable fluctuation that income-seeking investors should consider.

Dividends Paid for Over 25 Years?

The criterion examines the company paying dividends over a long period of time, highlighting financial stability.

Analyzing Intuit's (INTU) dividends paid over the past 25 years, it's clear that they have not consistently paid dividends for the entire period. The company only started paying dividends in 2011. Since then, the dividends have shown a healthy and consistent growth from $0.15 per share in 2011 to $3.24 per share in 2023. This indicates a positive trend in the company's financial health and commitment to returning value to shareholders, but it does not meet the criterion of paying dividends for over 25 years. Therefore, while the recent trend is good, Intuit does not satisfy the requirement of consistent 25-year dividend payments.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Intuit (INTU) and why it is important to consider

Reliable stock repurchases indicate that a company is focused on returning value to its shareholders. Consistently repurchasing shares over years can signal management's confidence in the company's growth and earnings potential. Moreover, share repurchases can enhance earnings per share (EPS) and offer an alternate method to return cash to shareholders aside from dividends.