Last update on 2024-06-27

MIND C.T.I. (MNDO) - Dividend Analysis (Final Score: 4/8)

Analyze MIND C.T.I. (MNDO)'s reliable dividends, growth rates, and payout ratios. Discover why MNDO scores 4/8 in dividend performance.

Short Analysis - Dividend Score: 4

We're running MIND C.T.I. (MNDO) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

MIND C.T.I. (MNDO) has demonstrated impressive dividend yields significantly above the industry average, manifesting as an attractive option for income-focused investors. However, despite the high yields, the fluctuating Dividend Growth Rate (DGR) and an alarmingly high Average Payout Ratio well over the sustainable threshold raise concerns about long-term sustainability. Additionally, while dividends are mostly covered by earnings and show good recent performance in covering from cash flows, historical inconsistencies draw attention to potential risks. The company has consistently paid dividends for 21 years, displaying stability, but it falls short of the 25-year benchmark. Lastly, limited stock repurchase activity over the past 20 years does not inspire strong confidence in its commitment to enhancing shareholder value through repurchases.

Insights for Value Investors Seeking Stable Income

While the high dividend yield and recent coverage improvements may attract income-focused investors, the high payout ratio and fluctuating growth rate raise red flags about long-term sustainability. Investors should approach MIND C.T.I. (MNDO) cautiously, assessing if the high dividends compensate adequately for the associated financial risks. It might be worth keeping on the watchlist while prioritizing companies with more consistently sustainable dividend policies and stable repurchase practices.

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 measures how much a company pays out in dividends each year relative to its stock price.

MIND C.T.I. (MNDO) boasts a dividend yield of 12.2449%, substantially higher than the industry average of 0.79%. Evaluating historical trends, we see an obscenely high peak in 2009 at 172.043%, possibly due to a massive dip in stock price that year at $0.93 paired with an inflated dividend per share of $1.6. Consistently, the company's dividend yield remains robust—hovering well above industry averages—and points to its attractive payout policy. For example, in 2016, the yield was 10.9756% while the industry average lagged at 0.63%. The trend generally showcases MNDO as a highly favorable investment for income-focused investors. The stability and magnitude of these yields are indicators of the company's strong profit generation, albeit it requires scrutiny if dividends are sustainable long-term.

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

The Dividend Growth Rate (DGR) is a key metric used to assess how much a company’s dividend payments have increased over a specific period. A DGR higher than 5% is generally considered healthy.

By analyzing the dividend ratios for the past 20 years, we see significant fluctuation: from as low as -87.5% in 2010 to as high as 700% in 2009. Given values like 84.6154% in 2005 and other years showing zero growth, we notice both dramatic increases and decreases, as well as years without dividends. With an average dividend ratio of approximately 34.91%, one could assume on the surface that MNDO manifests a high overall growth. While this volatile pattern complicates making definitive long-term growth assumptions, the overall trend suggests a high average growth, which could be seen as positive for dividend investors, but the high variability poses risk.

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

The Average Payout Ratio is a measure of a company's ability to maintain its dividend payments over the long term. A lower ratio signifies a more sustainable dividend.

MIND C.T.I. (MNDO) has an average payout ratio of 101.34% over the past 20 years, well above the 65% threshold often considered beneficial for sustainability. This is alarming as it signifies that the company is frequently paying out more than it earns, indicating that its dividends may not be sustainable over the long run. For instance, there were years where the payout ratio significantly exceeded earnings, like in 2006 with a payout ratio of 331.75% and in 2013 with 207.43%. This excessive payout could lead to financial strain, suggesting a bad trend in terms of dividend sustainability.

Dividends Well Covered by Earnings?

dividends are well covered by the earnings

The criterion that dividends should be well covered by earnings is crucial to ensure the company's financial health and sustainability of its dividend payout. Analyzing the provided data, the ratio of earnings per share (EPS) to dividends per share (DPS) indicates whether the payouts are sustainable. A ratio above 1 suggests that earnings are sufficient to cover dividends, whereas a ratio below 1 implies potential risk. Examining the results for MIND C.T.I. (MNDO): - 2003: EPS is 0.1718 and DPS is 0.14, the coverage is approximately 0.81 (adequate). - 2004: EPS is 0.3203 and DPS is 0.13, the coverage is approximately 0.41 (below ideal but acceptable). - From 2005 to recent years, the coverage varies significantly. The coverage is highest in 2009 (1.54) and lowest in 2007 (-0.36). - Since 2011, the payout coverage ratio generally stays around or above 1, indicating relatively consistent earnings to support dividends. This trend is relatively good as MNDO has demonstrated resilience in ensuring earnings can cover dividend payouts over time. Although some years show under-coverage, specifically 2007 and 2008, likely due to financial crises impacts, MNDO's recovery suggests a positive long-term outlook for dividend sustainability.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicate a company's ability to pay dividends without constraining its operational capabilities or financial health.

MIND C.T.I. (MNDO)'s free cash flow and dividend payout amounts from 2003 to 2023 show variability in the ratio indicating how well the cash flow covers dividends. The ratio 'Dividend covered by Cashflow' represents the percentage of free cash flow used for dividend payments. Values exceeding 1 indicate good coverage, while values below 1 suggest that dividends are not well covered by cash flow. For instance, in 2006, the ratio was exceptionally high at 14.06, suggesting abundant cash flow coverage for dividends that year. Conversely, values such as 0.42 in 2004 and 2005 reflect poor coverage. Over the long term, the ratio mostly fluctuates around 1, indicating mixed performance but generally positive as the dividends largely align with available cash flow. Recent years (2021-2023) show ratios near or above 1, signifying improved coverage. This mixed yet improving trend is beneficial, but consistent future performance will remain crucial.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are crucial for investors seeking consistent income, as it reduces risk and ensures predictability.

MIND C.T.I. (MNDO) has demonstrated stable dividend payments over the past 20 years, with the dividend per share mostly remaining between $0.13 and $0.32. The only exception was in 2009, where the dividend peaked at $1.6. However, aside from this anomaly, the dividend has not dropped by more than 20% in any given year. This indicates a trend of stability. For example, recent years (2019-2023) show dividends in a narrow range ($0.24-$0.30), reinforcing income predictability.

Dividends Paid for Over 25 Years?

This criterion analyzes whether MIND C.T.I. (MNDO) has consistently paid dividends for over 25 years, reflecting the company's commitment to returning value to shareholders.

The data indicates that MIND C.T.I. (MNDO) began paying dividends in 2003 and has continued to do so through 2023, amounting to 21 years of dividend payouts so far. Although this is a commendable achievement showcasing the company's continuous commitment to shareholder returns, it falls short of the 25-year mark this criterion seeks. Therefore, from the perspective of a longstanding dividend record, MNDO does not yet meet this specific threshold. However, the consistent dividends over the past two decades still suggest stability and reliability, aligning positively with shareholder expectations.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

The number of shares for MIND C.T.I. (MNDO) over the past 20 years shows limited stock repurchases, particularly in the years 2008, 2009, and 2010. Initial share count in 2003 was 21,143,000, decreasing during the repurchase years, reaching the lowest point at 18,613,000 in 2010. Post-2010, share numbers rise again, with a rise to 20,163,000 by 2023. This indicates that reliable stock repurchases have not been a consistent trend in the last two decades, suggesting MIND C.T.I. is not consistently committed to enhancing shareholder value through repurchases. The average repurchase rate of -0.1981 further emphasizes the lack of consistent repurchase activity, reflecting negatively on shareholder trust.