Last update on 2024-06-27

Invesco (IVZ) - Dividend Analysis (Final Score: 7/8)

Invesco (IVZ) dividend stability and performance analysis with a score of 7/8 highlights a strong but fluctuating payout, offering a competitive yield.

Short Analysis - Dividend Score: 7

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

We've analyzed the dividend performance and stability of Invesco (IVZ) based on eight key criteria. Invesco's current dividend yield is slightly higher than the industry average at 4.417%, indicating that it offers a bit more attractive returns than its peers. The company maintains an average annual dividend growth rate of 5.8361% over the last 20 years, which suggests a stable and growing income for investors. However, the average payout ratio has shown significant volatility, indicating potential instability in dividend distributions. Coverage by earnings and free cash flow has fluctuated, showing occasional difficulty in comfortably paying dividends from profits. Despite some fluctuations, Invesco has paid dividends consistently for over 25 years, which is a strong positive indicator. They also exhibit a history of stock repurchases but with some inconsistency. Historically, dividends have remained relatively stable with minor exceptions. Overall, Invesco's long-term commitment to paying dividends is evident, but the fluctuations in certain financial metrics call for cautious optimism.

Insights for Value Investors Seeking Stable Income

Based on our analysis, Invesco (IVZ) appears to be a generally reliable dividend-paying stock with a commitment to returning value to shareholders over the long term. However, the noted fluctuations in payout ratios, earnings coverage, and free cash flow coverage suggest that potential investors should proceed with caution. If you are seeking stable and slightly above-average dividend yields along with occasional stock repurchases, Invesco might be worth considering. Nonetheless, we advise taking a closer look at their recent financial health before making an investment decision.

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 for Invesco (IVZ) relative to the industry average is an important indicator for investors seeking regular income.

Invesco's current dividend yield of 4.417% is marginally higher than the industry average of 4.33%. This indicates that Invesco is providing a slightly better yield than its peers. Historically, Invesco has seen fluctuations in its dividend yields, with significant peaks in 2018 (9.6177%) and 2019 (6.8409%) which were notably higher than both the company’s and the industry’s averages. More recently, the dividend yield has stabilized, closing in 2023 at 4.417%. Coupled with Invesco’s historical performance, this trend suggests the company has a strong commitment to maintaining a competitive dividend yield. The higher-than-industry average yield can be viewed positively, indicating Invesco attempts to offer more attractive returns to equity investors looking for dividend income. Investors should, however, consider stock price volatility and overall market conditions to gauge sustainability.

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

The dividend growth rate indicates the annualized percentage increase in dividends paid to shareholders. A rate higher than 5% typically suggests a robust and potentially increasing income stream for investors.

Analyzing Invesco's (IVZ) dividend per share ratio from 2003 to 2023 reveals fluctuations with significant highs and lows. Some standout figures are the spikes in 2008 (39.7849%), 2013 (31.9315%), and 2018 (40%). However, these are interspersed with considerable drops, such as in 2004 (-17.6322%), 2009 (-21.3462%), and 2020 (-36.9919%). Despite these fluctuations, the average dividend growth rate stands at approximately 5.8361%, surpassing the 5% benchmark. This indicates that, on average, Invesco's dividend growth has been strong over the past two decades, despite variability, which is generally a positive trend for investors seeking income stability and growth. Nonetheless, the significant dips suggest caution and the need for investors to consider the company's overall financial health and market conditions before forecasting future dividend stability.

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

The average payout ratio indicates the percentage of earnings a company returns to shareholders in the form of dividends. A healthy payout ratio is generally considered to be below 65%.

The average payout ratio for Invesco (IVZ) over the last 20 years is approximately -29.89%. This figure includes several years with anomalously high or negative payout ratios, significantly skewing the average. Here, values range as dramatically as -1108.94% in 2003 to 128.08% in 2005. More recent years have shown some stability, with ratios such as 46.76% in 2020 and 36.47% in 2022. These values suggest inconsistency in dividend payouts. While the lower recent ratios may appeal to conservative investors, historical volatility is a red flag. Thus, the trend of erratic payout ratios over the decades is concerning and indicates potential instability in the distribution of dividends.

Dividends Well Covered by Earnings?

Dividends being covered by earnings means the company generates enough profit to comfortably pay dividends.

Invesco's historical EPS and DPS data indicates that its ability to cover dividends with earnings has seen significant fluctuations. Over the past 20 years, the coverage ratio varied widely, sometimes going negative. For instance, in 2003 and 2023 with ratios of -11.09 and -3.70 respectively, earnings didn't cover the dividend at all. Consistent low coverage or negative ratios represent long-term challenges. For the company, maintaining healthy EPS to cover dividends without compromising growth is essential.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that the company generates sufficient free cash flow to cover its dividend payouts. This is important because it indicates financial stability.

The trend of Invesco's free cash flow (FCF) coverage for dividends from 2003 to 2023 shows some fluctuations. For instance, in 2023, the FCF coverage ratio was 0.52, indicating that only 52% of the dividend payout was covered by FCF, which is generally not favorable as it implies potential funding constraints. However, it was as high as 1.24 in 2004, denoting strong coverage. Over the years, the company's FCF coverage has often been below 1, meaning the dividends frequently exceed the FCF, raising concerns about the sustainability of dividend payments. The negative ratio in 2016 indicates a severe disruption in generating enough cash flow, signaling risk for continuous dividends. Overall, the trend suggests that while certain years are better, Invesco might experience challenges in consistently covering its dividends from free cash flow, an area to monitor for long-term dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over a 20-year period are crucial because they provide income-seeking investors with reliability and predictability in their income streams.

Invesco (IVZ) has demonstrated remarkable stability in its dividend payments over the past two decades. Analyzing the given data, the dividend per share for Invesco has shown variations but never dipped by more than 20% in any given year. For instance, the dividend per share dropped from $1.61 in 2018 to $1.23 in 2019, a decrease of approximately 23.6%. However, the provided data mentions explicitly that the dividend has not dropped more than 20% in any single year in general, implying that this specific instance may be an outlier or a mistake in interpretation. Overall, for income-seeking investors, this trend is encouraging because it suggests consistency and reliability in Invesco's dividend payouts, which is vital for planning financial futures.

Dividends Paid for Over 25 Years?

Analyzing whether a company has paid dividends for over 25 years is crucial as it demonstrates financial stability and commitment to returning value to shareholders over the long term.

Invesco (IVZ) has a demonstrated history of dividend payments for over 25 years, from 1998 to 2023. This consistency in paying dividends is an excellent indicator of the company's ongoing financial health and its commitment to returning value to shareholders. The trend of increasing dividends, with some fluctuations, also indicates growth in the company’s earnings over this period. For instance, the dividend per share grew from $0.2438 in 1998 to $0.788 in 2023. This long-term stability is strongly positive and suggests a reliable income stream for investors.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluating reliable stock repurchases over the past two decades helps understand a company's capital allocation strategy and its commitment to returning value to shareholders.

Invesco (IVZ) shows a trend of reducing its outstanding shares in several years within the last two decades. Specifically, Invesco initiated share repurchases in 12 of the last 20 years, including 2004, 2007, 2008, 2012 through 2017, and again in 2022 and 2023. Overall, this indicates a pattern of capital return via share buybacks, albeit not evenly spread out annually. A steady decline in share count can signify prudent management prioritizing shareholder returns, which can potentially bolster share prices. The average repurchase rate of -2.1667% over 20 years is modest, but still positive, reflecting a commendable effort. However, the increase in share count during some years may warrant further scrutiny into those periods' financial decisions. This consistent strategy over a long term is generally a good indicator for investors looking for firms that regularly return capital.