Last update on 2024-06-27

Loews (L) - Dividend Analysis (Final Score: 6/8)

Detailed Loews (L) dividend policy performance analysis with 8-criteria scoring. Loews scored 6/8. Comprehensive study covering dividend yield, growth rate, payout ratio, earnings, and cash flow coverage.

Short Analysis - Dividend Score: 6

We're running Loews (L) 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?

The dividend yield represents the ratio of a company's annual dividend compared to its share price. It is essential in assessing the return on investment from dividends alone without considering any stock price appreciation.

Loews' current dividend yield of 0.3621% is significantly lower than the industry average of 2.47%. Over the past 20 years, there has been a noticeable decline in Loews' dividend yield, bottoming out in 2023. For instance, in 2003, the yield was 1.2133% compared to the current 0.3621%. Meanwhile, the industry has shown more fluctuation, with the industry average diving as high as 35.79% during the 2008 financial crisis. This downward trend in Loews' dividend yield, despite a rising stock price from $16.48 in 2003 to $69.59 in 2023, indicates that dividend growth has not kept pace with the stock's appreciation. This is evident from the modest increase in annual dividends from $0.20 in 2003 to approximately $0.252 in 2023. The trend is adverse for authorities looking for robust dividend returns, making Loews less attractive for dividend-focused investors.

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

Dividend Growth Rate over 5% in last 20 years

The given data presents dividend per share (DPSR) values for Loews (L) over a span from 2003 to 2023. To evaluate if the Dividend Growth Rate meets or exceeds 5%, we need to analyze both the consistency and increment of dividends. Unfortunately, the presented dataset appears quite erratic, with the absence of dividends in multiple years. This starkly contrasts with prominent values in certain isolated years. Furthermore, the average dividend ratio is relatively low at 1.42. Such inconsistency not only undermines the potential for a stable 5% growth rate but also poses reliability concerns for investors seeking predictable dividends.

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

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

Over the past two decades, Loews (L) has maintained an exceptionally low payout ratio. With an average payout ratio of just 9.02%, it is far below the threshold of 65%. This indicates that Loews has been conservative in returning capital to shareholders, opting to retain a significant portion of its earnings. Such a strategy may be favorable for long-term growth, as it suggests that the company is reinvesting profits back into operations or acquisitions rather than distributing them as dividends. The consistently low payout ratio, especially values like -18.22% in 2003 or -7.59% in 2020, highlights a cautious fiscal approach. This generally bodes well for the company's financial health and sustainability of its dividend policy, deeming it a good trend for prospective investors.

Dividends Well Covered by Earnings?

Covered dividends mean that the company's earnings are sufficient to pay its dividends.

Over the period from 2003 to 2023, Loews' dividends per share have largely been well covered by the earnings per share. However, there are notable exceptions such as in 2003, 2020, and a negative trend such as in 2019. Particularly in 2023, the coverage ratio is 0.039975, indicating a substantial dip compared to previous years. This inconsistency can raise concerns about dividend sustainability. Investors prefer a stable or growing dividend coverage to ensure continued income from their investments. The negative coverage in 2003 and the years with lower coverage ratios necessitate close monitoring of the firm’s future financial health and earnings stability.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow: This criterion assesses if the company generates enough free cash flow to cover its dividend payments. Consistently high coverage ratios indicate the sustainability of dividends.

Over the study period, Loews (L) shows varying levels of free cash flow coverage for its dividends. The coverage ratio is consistently above 0.09 from 2003 to 2005, aligning with a healthy trend. However, in 2008 and 2010, negative free cash flow offsets any dividend sustainability, reflected in negative coverage (-1.17, -0.11). Post-2011, despite an initial positive trend, the coverage ratio dilapidates to as low as 0.017 in 2023. A high ratio of 0.4 in 2014 reflects a brief period of strong cash coverage. Trending coverage ratios below 0.1, increasingly pose a risk to maintaining a steady dividend schedule and might lead to potential cuts or financial strain. Recent downtrends highlight potential sustainability concerns for investors.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends ensure consistent income for investors and indicate financial health and reliable management.

Over the past 20 years, Loews' dividend per share has shown remarkable stability, fluctuating minimally around the $0.252 mark. The most notable change occurred in 2013 when the dividend per share increased to $0.3145, representing a positive step. Importantly, there has been no drop greater than 20% year-over-year, thus affirming stability. This lack of significant reduction underscores Loews' commitment to its shareholders, making it a reliable choice for income-seeking investors.

Dividends Paid for Over 25 Years?

Explain the criterion for Loews (L) and why it is important to consider

Criterion 6 examines whether Loews has consistently paid dividends for over 25 years. This long-term consistency is a critical indicator of the company's financial health and commitment to returning value to shareholders. A history of uninterrupted dividend payments suggests that the company has been both profitable and has maintained a stable cash flow over an extended period. Moreover, it signifies the management's dedication to sharing earnings with investors, which can be a strong lure for long-term investors seeking stable income.

Reliable Stock Repurchases Over the Past 20 Years?

Discuss the importance of reliable stock repurchases over a significant period like 20 years for a company like Loews (L).

The data on Loews (L) clearly demonstrates a consistent trend of share repurchases over the past two decades. In 2003, the company had about 556.35 million shares outstanding, which has gradually declined to approximately 227.48 million shares by 2023. This reflects not only a substantial reduction of nearly 60% but also highlights the company’s commitment to returning capital to shareholders consistently during this period. This trend is generally favorable for shareholders as repurchasing shares often signals a company’s confidence in its own value and is an effective way of enhancing shareholder value by reducing the number of shares outstanding. Moreover, consistent repurchasing indicates effective use of surplus capital and a focus on delivering shareholder returns. The average repurchase percentage of -4.3222% per year further underscores this commitment. Therefore, the steady repurchase activity by Loews over the last two decades is considered a positive trend for shareholders.