Last update on 2024-06-27

LVMH Moet Hennessy Louis Vuitton (MOH.DE) - Dividend Analysis (Final Score: 4/8)

In-depth dividend analysis of LVMH Moet Hennessy Louis Vuitton (MOH.DE) covering performance and stability using an 8-criteria scoring system. Final Score: 4/8.

Short Analysis - Dividend Score: 4

We're running LVMH Moet Hennessy Louis Vuitton (MOH.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

LVMH Moet Hennessy Louis Vuitton (MOH.DE) underwent an 8-criteria analysis and achieved a score of 4 out of 8. While its current dividend yield of 1.697% is lower than the industry average of 2.5%, LVMH has shown steady increases in dividends per share since 2008. The average annual dividend growth rate over the past 20 years is 11.87%, surpassing the benchmark of 5%. The average payout ratio is 29.70%, which is well below the 65% threshold, indicating a conservative dividend policy. Dividends are adequately covered by both earnings and cash flow, though there were fluctuations during economic downturns like the COVID-19 pandemic. LVMH has a long history of paying dividends for over 25 years, albeit with minor dips. Finally, while stock repurchases weren't always consistent, the company employed strategic buybacks during financially strong periods.

Insights for Value Investors Seeking Stable Income

Based on the analysis, LVMH Moet Hennessy Louis Vuitton (MOH.DE) seems to be a stable investment for those seeking long-term growth and returns. The company demonstrates a balanced approach to growth and shareholder returns despite a dividend yield below the industry average. With a strong record of dividend payments and growth, coupled with conservative management of payout ratios and strategic stock buybacks, LVMH appears to be a worthwhile consideration for investors. However, the lower recent dividend yield and minor inconsistencies in stock repurchases should be kept in mind.

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 the annual cash flow an investor receives from dividends as a percentage of the investment's current market price.

While LVMH's current dividend yield of 1.697% falls short of the industry average of 2.5%, it is crucial to consider the historical trends and steady increases in dividends per share. Since 2008, despite market fluctuations, LVMH has consistently paid out dividends, reaching a high of €12.50 per share in 2023. The stock price's significant rise from €46.1 in 2008 to €736.6 in 2023 indicates strong capital appreciation alongside dividends, suggesting a balanced focus on both growth and shareholder returns. Hence, while the dividend yield percentage is slightly lower currently, the overall growth and commitment to dividends depict a positive long-term trend.

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

Analyzing the Dividend Growth Rate (DGR) involves measuring the historical growth rate of the company's dividends over a given period.

LVMH Moet Hennessy Louis Vuitton (MOH.DE) has shown significant fluctuations in its Dividend Growth Rate over the last 20 years, ranging from a high of 71.4286% in 2022 to a decrease of -23.913% in 2021. The average dividend growth rate over this period is approximately 11.87%, which is notably above the 5% benchmark. This trend is very promising for investors, as it suggests that the company has been able to consistently increase its dividends at a robust rate, outperforming the typical market expectations. Such a steady increase indicates strong underlying financial health and a commitment to returning value to shareholders.

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

The payout ratio indicates the proportion of earnings a company pays to its shareholders in the form of dividends. It's crucial to assess sustainability.

Analyzing the available data, the average payout ratio for LVMH Moet Hennessy Louis Vuitton from 2003 to 2023 is approximately 29.70%. This value is well below the 65% threshold, suggesting that LVMH maintains a conservative and sustainable approach toward dividend distribution. Although there is a notable spike to 98.55% in 2020, this appears to be an anomaly perhaps due to the global economic impact of the COVID-19 pandemic. Subsequently, the 2021 payout ratio normalized to 29.29%, which aligns well with the average of previous years. This trend is generally favorable and indicates good management practices in maintaining a balance between distributing profits to shareholders and retaining earnings for future growth and opportunities.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

The Earnings Per Share (EPS) for LVMH Moet Hennessy Louis Vuitton (MOH.DE) has shown a varied trajectory over the past two decades. Starting at 1.8593 in 2003 and progressing to 30.3446 in 2023 indicates significant growth. Simultaneously, Dividend Per Share (DPS) showed a rising trend, particularly notable from 2008 onwards. Initially, a mere 1.6 in 2008, it ascended to 12.5 by 2023. The coverage ratio, signifying the proportion of earnings allocated for dividend payments, portrays key insights. It fluctuated around 20-30% initially, jumping to almost 99% in 2020—coinciding with global economic interruptions, indicating that nearly all earnings were designated for shareholder returns, hinting potential risks. In 2023, this balance stabilized around 41%, reassuring a healthy dividend coverage.

Dividends Well Covered by Cash Flow?

Dividends being well covered by cash flow ensures that the company can sustain its dividend payments without harming its financial health. It indicates operating efficiency and robust cash generation.

The data shows varying degrees of free cash flow coverage for dividend payments by LVMH over the years. In the earlier part of the period, the coverage ratios are generally higher and more consistent, demonstrating a robust alignment between free cash flow generation and dividend payouts. The periods 2008 to 2012 show substantial coverage (~0.6), suggesting strong liquidity and confidence in payout sustainability despite the economic crisis. However, starting from 2016, we observe some fluctuation. Notably, the coverage dips to 0.274 in 2020 and 0.229 in 2021 during the COVID-19 pandemic, reflecting the strain on cash flows. Since then, it has recovered somewhat to ~0.47 and ~0.59 by 2023. This trend is positive, indicating that the company has regained its footing post-pandemic. Challenges remain to maintain higher coverage ratios to ensure greater 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.

Upon examining LVMH Moet Hennessy Louis Vuitton's (MOH.DE) dividend per share data over the past 20 years, there has been no instance where the dividend declined by more than 20%. The company's track record shows consistent growth or stability in its dividends. Starting from 1.6 in 2008, dividends have steadily increased to 12.5 in 2023. There was a drop from 2019 to 2020, from 9.2 to 7, representing a decline of approximately 23.9%, which is marginally concerning. However, the rebound to 12 in 2021 and subsequently to 12.5 in 2022 restores confidence in the company's dividend payment reliability. This trend of stable, and overall rising, dividends can be considered favorable for investors seeking consistent income.

Dividends Paid for Over 25 Years?

Consider this criterion to assess long-term dividend sustainability and reliability for LVMH. Dividends indicate shareholder rewards.

LVMH Moet Hennessy Louis Vuitton (MOH.DE) has a favorable long-term track record. Over 25 years, the dividend per share increased from €1.60 in 2008 to €12.50 in 2023. This consistent increase reflects financial health and dedication to rewarding shareholders. The company's ability to maintain and grow dividends consistently demonstrates robust performance, making this trend highly favorable.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluating reliable stock repurchases demonstrates a company's commitment to returning value to shareholders. Consistent repurchases indicate financial health and confidence in future earnings.

Over the last 20 years, LVMH Moet Hennessy Louis Vuitton (MOH.DE) reduced the number of outstanding shares from 489,844,910 in 2003 to 500,056,586 in 2023. Notably, this trend wasn't linear; the number increased during certain years, but the company effectively executed reliable repurchases in key years such as 2005, 2008, 2009, 2016, 2017, 2018, 2019, 2021, 2022, and 2023. Analyzing the trend, the average repurchased stock over the last 20 years stands at approximately 10.93%. While the average is positive, the repurchase strategy appears sporadic rather than steady, often counterbalancing periods of issued shares. Consequently, this indicates a mixed trend in terms of consistency but suggests strategic buybacks in financially strong periods. Hence, while the exact approach may not be deemed 'reliable' in a conventional sense, it's indicative of a sophisticated, adaptive capital management strategy.