Last update on 2024-06-27

Inter Parfums (IPAR) - Dividend Analysis (Final Score: 3/8)

Inter Parfums (IPAR) scores 3/8 in dividend analysis, evaluating yield, growth, payout ratios, dividend stability, and coverage by earnings and cash flow.

Short Analysis - Dividend Score: 3

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

Inter Parfums (IPAR) was evaluated using an 8-criteria dividend scoring system and received a score of 3. Its current dividend yield of 1.736% is slightly below the industry average of 1.82%, and the company exhibits significant yield volatility. The average annual dividend growth rate is volatile, ranging widely from as low as -71.4286% to as high as 203.0303%. The average payout ratio of 36.23% is below the 65% healthy threshold, indicating a disciplined dividend policy. Dividend payments are generally well-covered by earnings but show significant inconsistency regarding cash flow coverage. Despite some uneven coverage, the company has increased its dividend per share gradually from 2003 to 2023 without dropping more than 20% annually. IPAR has paid dividends for 21 years, yet has not reached the 25-year milestone. Additionally, IPAR lacks a consistent stock repurchase program, with sporadic buybacks over the past 20 years.

Insights for Value Investors Seeking Stable Income

Due to the high volatility in dividend growth and inconsistent cash flow coverage, investing in IPAR carries some risk for dividend-focused investors. However, the low payout ratio, upward trend in stock price, consistent dividend payments, and steady increase in dividends per share for 21 years suggest a strong financial foundation and commitment to shareholder returns. Investors seeking long-term gains with some exposure to dividends might find IPAR promising, but those focused exclusively on stable, high dividends might want to proceed with caution or look elsewhere.

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?

what dividend yield is and why it is an important criterion for investors.

Inter Parfums (IPAR) has a current dividend yield of 1.736%, which is slightly below the industry average of 1.82%. This data point alone might appear as a minor disadvantage compared to the average; however, it's crucial to consider the trend of Inter Parfums' dividend yield over the past 20 years. The data reveals significant volatility in annual dividend yields, with peaks as high as 2.68% in 2013 and as low as 0.33% in 2020. In parallel, the stock price shows a strong upward trend over the years, resulting in capital gains for shareholders. The remarkable resilience in dividend payments, coupled with consistent stock price appreciation, suggests that Inter Parfums maintains a commitment to returning value to shareholders. Although the current yield is slightly less than the industry average, the long-term distributive stability and positive price appreciation trend indicate a healthy financial position. Investors should weigh these factors considering that stable and growing dividends can often signal robust profitability and effective management.

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

Evaluate if the Dividend Growth Rate for Inter Parfums (IPAR) has been higher than 5% annually over the last 20 years. A consistent growth rate is crucial for attracting long-term investors and showcasing financial health.

The data provided indicates that the Dividend Growth Rate has been volatile, with values ranging from -71.4286% to 203.0303%. Despite this instability, there have been several years of substantial positive growth rates. For example, in 2021, the growth rate was 203.0303%, and in 2013 it was 200%. However, there have also been significant dips, including -71.4286% in 2020 and -50% in 2014. Overall, the average dividend ratio is 36.396%. While there have been years of impressive growth, the volatility does not signify a stable upward trend, which can be a potential concern for long-term dividend investors. Past results do not guarantee future success, and the company’s ability to maintain such high growth is uncertain. Investors should weigh this volatility against the overall upwards trend when considering IPAR. Given the high average, this can be interpreted as good, but caution is also advised.

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

A payout ratio below 65% is a hallmark of a company's ability to reinvest a significant portion of its earnings back into growth, while still rewarding shareholders.

The average payout ratio of Inter Parfums (IPAR) over the last 20 years stands at approximately 36.23%. This figure is decisively below the 65% threshold, which is generally considered a healthy upper limit for most companies. Such a low payout ratio indicates that Inter Parfums has been conservative with its dividend payouts relative to its earnings, allowing the company to reallocate a substantial portion of its profits towards growth opportunities, research and development, or other capital expenditures. While there are outlier years such as 2013 with a payout ratio of over 75%, the company has remained well below this benchmark on average, suggesting a disciplined and sustainable dividend policy. This is particularly beneficial for long-term investors looking for both income and growth, as the company maintains enough financial flexibility to fuel business expansion while also delivering consistent returns to shareholders. Overall, the trend is decidedly positive and suggests a robust financial health rooted in balanced capital allocation.

Dividends Well Covered by Earnings?

Explain the criterion for Inter Parfums (IPAR) and why it is important to consider

This criterion assesses whether a company's dividends are covered by its earnings per share (EPS). A well-covered dividend signifies that a company can comfortably pay dividends to shareholders from its profits, rather than using debt or other sources which could be unsustainable. Generally, an EPS to dividend per share (DPS) ratio above 1 indicates good coverage.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow means the company generates enough cash flow to cover its dividend payouts. It is an indicator of sustainability.

Evaluating the free cash flows (FCF) and dividend payout amounts for Inter Parfums (IPAR) from 2003 to 2023, the Dividend Covered by Cashflow ratios indicate a mixed performance. Key metrics are: a remarkable peak of 1.527 in 2023, and significant troughs, such as -3.648 in 2022. Such volatility suggests inconsistent dividend coverage. While years like 2010 (ratio of 0.939) exhibit healthy coverage, periods like 2015 (-0.214) highlight poor cash flow management relative to dividend obligations. Incompressible [-> Inconsistent] coverage jeopardizes long-term 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 of utmost importance for income-seeking investors.

Inter Parfums (IPAR) exhibits a robust record of stability in dividend payments over the past 20 years. The dividend per share gradually increased from $0.0533 in 2003 to $2.5 in 2023. Notably, there was no year where the dividend dropped by more than 20%, which signifies financial stability and consistent performance. This is highly favorable for income-seeking investors who prioritize stable and reliable dividend income. The stability reassures investors of the company's resilient financial health and its commitment to returning value to shareholders.

Dividends Paid for Over 25 Years?

This criterion examines if a company has consistently paid dividends for over 25 years as it reflects its financial stability and commitment to returning value to shareholders.

Inter Parfums (IPAR) has a history of paying dividends starting from 2002. Over the past 21 years, IPAR has shown a strong commitment to returning value to its shareholders. Despite not reaching the 25-year mark yet, the company has increased its dividend over the years from 0.04 in 2002 to 2.5 in 2023, which is a substantial growth and signifies strong financial performance. This trend is good as it suggests reliable financial health and a shareholder-friendly approach. However, the company does not satisfy the strict condition of 25 years yet but is on a promising trajectory.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluate the consistency of stock repurchases by a company over a period of 20 years and why it matters for investment analysis.

Over the past 20 years, Inter Parfums (IPAR) has not shown a consistent pattern of stock repurchases. The key years identified for repurchases are 2005, 2008, 2009, and 2019. While there were reductions in the number of shares during these years, the overall pattern of share counts primarily shows annual increases or stabilizations. The average repurchase rate of approximately 0.3% per year indicates a lack of commitment to a steady buyback program. This sporadic approach to share repurchases could be seen as a negative from an investment standpoint as it signals a potentially unclear strategy for capital return to shareholders. Regular buybacks can support share prices and signal management's confidence in the company's future, but this has not been consistently observed with Inter Parfums.