Last update on 2024-06-27

Mosaic (MOS) - Dividend Analysis (Final Score: 4/8)

In-depth analysis of Mosaic (MOS) dividend performance using an 8-criteria system. Final score: 4/8. Learn about yield, growth, payout, and more!

Short Analysis - Dividend Score: 4

We're running Mosaic (MOS) 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 important for investors seeking regular income from their investments.

Mosaic's (MOS) current dividend yield of 2.9387% is notably lower than the industry average of 12.48%. Over the last 20 years, Mosaic's dividend yield has seen significant fluctuations, with major peaks in 2014 (3.8963%) and 2015 (3.7504%) and troughs where no dividend was offered (2004-2006). The recent trend shows an increase from 1.2822% in 2022 to 2.9387% in 2023, indicating a positive development. However, the yield being substantially lower than the industry average suggests that while there is growth, it may not be competitive in attracting dividend-focused investors. The stock price closing figures, oscillating over the years with a peak in 2008 ($94.34) and recent figures in 2023 ($35.73), reflect the company's volatile market performance. Despite gradual recovery and dividend adjustments, the yield's contrast with industry norms might concern income-seeking investors.

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

The dividend growth rate measures the annualized percentage change in the dividends paid by a company to its shareholders over a specific period. It is important for investors seeking income growth from their investments.

Looking at the data provided for Mosaic (MOS) over the past 20 years, the dividend growth rate is inconsistent, displaying significant fluctuations. Years like 2003 and 2004 had negative growth rates of -25% and -100%, respectively, implying dividend cuts. While some years, such as 2010 and 2023, experienced massive growth rates of 1,400% and 86.6667%, these jumps could be due to unexpected positive performance or recovery from lower base values. Overall, the average dividend ratio of 78.1992% does not necessarily indicate a stable and sustainable dividend growth path, although it is broadly positive. This irregular pattern suggests that Mosaic's dividend policy may not reliably meet the criteria of a consistent annual growth rate surpassing 5% that conservative income-focused investors often seek.

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

Explanation of what payout ratio is and why it's critical to have it below 65%.

The Average Payout Ratio is 6.84%, which is significantly below the benchmark of 65%. This generally signifies a conservative and prudent dividend policy by Mosaic (MOS). It implies a strong buffer for the company to withstand various economic conditions without jeopardizing dividend payments. This trend can be seen positively but needs to be balanced with investor expectations for returns.

Dividends Well Covered by Earnings?

It is important that a company's dividends are well covered by its earnings as this indicates financial stability and sustainability. If the earnings per share (EPS) consistently exceed the dividend per share (DPS), it shows that the company generates enough profit to cover its dividend payments, minimizing the risk of potential dividend cuts.

The Dividend Coverage Ratio (DCR) for Mosaic (MOS) over the years has shown significant volatility. For instance, in high-performing years like 2011 (0.0356) and 2013 (0.2260), the ratio is relatively healthy, indicating that earnings were able to comfortably cover dividends. However, there are concerning years like 2003 and 2017 where the DCR is negative, implying dividends were not covered by earnings. The ratio improved notably in recent years like 2023 with a ratio of 0.2986. Though suggesting improvement, the high variability indicates a risky trend. Overall, Mosaic’s ability to cover its dividends from earnings has been inconsistent, signaling a rather unreliable long-term dividend-paying capability.

Dividends Well Covered by Cash Flow?

This criterion evaluates how well a company’s dividend payments are covered by its free cash flow. It is important because paying dividends from a sustainably strong cash flow base indicates the company's financial health and its ability to return value to shareholders. A higher ratio indicates a more sustainable dividend.

Examining Mosaic's free cash flow and dividend payout from 2003 to 2023, we observe considerable volatility in annual coverage ratios. In years such as 2008, we see notably high free cash flow (FCF) levels with FCF covering dividends by more than 40 ahead of other years. But, there are also tumultuous years like 2019 where negative cash flow introduces concerns about sustainability (-0.317 ni..; overall negative coverage trends shrink Mosaic's competitiveness substantially. In essence healthy, consistent coverage hints, albeit intermittent fluctuations exist.

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.

Analyzing Mosaic's (MOS) dividend per share over the last 20 years, we observe that there have been periods of dividend suspensions and fluctuations. For instance, between 2004 and 2008, the company made no dividend distributions. Nevertheless, Mosaic significantly increased its dividend payments starting in 2011, exceeding 1 USD per share in several years. Despite fluctuations, one notable drop occurred from 2017 to 2018, where the dividend per share decreased from $1.1 to $0.6, signaling a drop greater than 20%. However, other periods show resilience, with the company sustaining or moderately increasing dividends. Hence, for the criterion of not dropping by more than 20% consistently, Mosaic's performance is inconsistent. The significant dividend decrease in 2018 is a key detractor, making this trend unfavorable for income-seeking investors seeking stability.

Dividends Paid for Over 25 Years?

Check whether Mosaic (MOS) has paid dividends consistently over the last 25 years, reflecting the commitment of the company to return capital to shareholders.

The data reveals that Mosaic (MOS) has not consistently paid dividends over the past 25 years. There were several years (2004-2006) where dividends were not paid at all and some instances of lower or irregular payments (e.g., 2001, 2015, and 2018). Although the company did resume and significantly increase its dividends in later years, particularly notable in 2021 with $0.5625 and 2022 with $1.05, the overall trend and history exhibit inconsistency. This inconsistency can be seen as a negative indicator for investors looking for reliable and stable dividend income over an extended period. Therefore, Mosaic (MOS) does not meet the criterion of consistent dividend payments over the last 25 years.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the importance of evaluating stock repurchases as a criterion for financial health of a company like Mosaic.

A review of Mosaic's share numbers over 20 years reveals fluctuating repurchases. The average repurchased amount being 10.4313 and repurchases on 11 occasions shows an inconsistent, but some commitment to buybacks. Only periodic buybacks from 2012 onwards present a mixed trend, possibly hinting at strategic repurchases aligned with company’s financial positioning. While in some years, share counts grew substantially (e.g., from 114.8M in 2003 to 440.3M in 2007), indicating either share issuances or acquisitions.