Last update on 2024-06-27

New York Community Bancorp (NYCB) - Dividend Analysis (Final Score: 4/8)

Analyze New York Community Bancorp's (NYCB) dividend policy using an 8-criteria scoring system. Get insights into its stability, performance, and long-term sustainability.

Short Analysis - Dividend Score: 4

We're running New York Community Bancorp (NYCB) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The analysis assesses the performance and stability of New York Community Bancorp (NYCB) using 8 criteria. The dividend yield of NYCB has consistently been higher than the industry average, which is a positive sign, but it may also indicate higher risk or lower growth expectations. However, despite the high yields, the average annual growth rate of NYCB's dividends has been below 5% over the past 20 years, indicating instability and inconsistency. The payout ratio has generally been low, indicating sustainability, but extreme outliers suggest potential financial distress at times. Dividends have not always been well-covered by earnings or cash flow, showcasing instability. While NYCB has paid dividends for over 25 years, there was a notable reduction in 2016. Lastly, stock repurchases have not been reliable over the past 20 years.

Insights for Value Investors Seeking Stable Income

Given the findings, NYCB's dividends show significant inconsistency and volatility, and though there is a history of paying dividends, the stability and sustainability are questionable. If you are an income-focused investor looking for a reliable dividend-paying stock, you might want to explore other options with a more stable and consistent dividend track record. However, if you are willing to tolerate some risk for potentially higher returns, NYCB could still be worth considering.

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 is crucial as it represents a company's annual dividend payments divided by its market cap, indicating the return on investment.

New York Community Bancorp (NYCB) consistently boasts a dividend yield higher than the industry average across the past 20 years. For 2023, NYCB's yield stood at 6.6471%, vastly exceeding the industry average of 2.76%. Historically, NYCB saw its highest yield in 2008 at 8.3612%, coinciding with a stock price of $11.96, reflecting strong performance during periods of market downturn. This trend generally underscores NYCB's strong dividend paying capacity, providing good return on equity and signaling stability to potential investors. However, consistently high yields might imply higher risk or lower growth expectations.

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

The Dividend Growth Rate evaluates how much the dividends provided to shareholders have increased over a period of time. A rate higher than 5% over 20 years signals consistent financial health and commitment to returning value to investors.

The given data shows a varied Dividend Per Share Ratio over the last 20 years for New York Community Bancorp (NYCB). Specifically, the values range widely from a high of 53.9415% in 2003 to drastic reductions including zero payouts in various years and a significant negative ratio of -32% in 2016. Furthermore, the average ratio stands at 3.4276%, which is below the 5% benchmark. This indicates that NYCB has not consistently grown its dividends per share by more than 5% annually over the past 20 years. Hence, it reflects poorly on NYCB's capacity to provide consistently increasing returns to shareholders through dividends. Moreover, the fluctuations imply that dividend payments have been unstable and unreliable over this period.

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

The average payout ratio should be lower than 65% over the last 20 years to ensure sustainable dividend payments. This demonstrates the company's ability to maintain earnings growth while returning capital to shareholders.

The average payout ratio for New York Community Bancorp (NYCB) over the past 20 years stands at approximately 13.9%. This is substantially below the 65% threshold, which would typically be an excellent indicator of a company's capacity to sustain its dividend payments. However, the data shows significant volatility with extreme outliers, like 430.66% in 2008 and -952.38% in 2015. These anomalies suggest points of financial distress or accounting adjustments, which should be analyzed further to understand their nature and implications. Excluding outlier years, the average payout ratio would be higher, potentially affecting long-term sustainability. Overall, while the 13.9% average payout ratio is low and theoretically favorable, attention must be given to the erratic patterns to ensure a stable and reliable dividend policy.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings is an important criterion as it reflects the sustainability of dividend payments. A higher coverage ratio indicates a company's ability to pay and potentially increase dividends in the future.

The trend for New York Community Bancorp (NYCB) shows significant fluctuations in how well dividends are covered by earnings. Initially, in 2003, the coverage was at a low 0.3988, indicating potential strain on maintaining dividend payouts. This improved by 2005 to around 0.9009, suggesting a better balance between earnings and dividends. However, post-2007 financial crisis, there were notable fluctuations, with a sharp drop to 4.3066 coverage in 2008, reflecting possibly reduced earnings or consistent dividends despite strained profits. The erratic nature of coverage from 2015 onwards, dropping to as low as 0.5059 in 2022, raises concerns over the dividend sustainability. It’s critical for NYCB to stabilize earnings to ensure secure and sustainable dividends. Prolonged periods where earnings do not adequately cover dividends, as indicated by coverage ratios below 1, often suggest potential future cuts or adjustments to dividend policies, unless the company can ramp up its profits substantially.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow refers to the extent to which a company generates sufficient free cash flow to cover its dividend payouts. This ensures the sustainability of dividends and is crucial for income-seeking investors.

An examination of New York Community Bancorp's (NYCB) free cash flow and dividend payout amount from 2003 to 2023 shows mixed results. Between 2003 and 2013, free cash flow covered dividend payouts irregularly, with negative coverage in 2003, 2010, and 2015. In more recent years, the coverage has generally improved, with particularly strong coverage in 2023 at 2.63, indicating that free cash flow wasmore than 2.6 times the amount spent on dividends, which is very positive. Overall, although there have been isolated years where dividend payments exceeded free cash flow, the long-term trend shows better coverage in recent years. This improving trend is good for investor confidence in the sustainability of NYCB's dividends.

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 the dividend per share data for New York Community Bancorp (NYCB) over the last 20 years, it's evident that the company has demonstrated a remarkable consistency in its dividend payments, especially from 2008 onwards where dividends per share maintained at $1. However, there was a notable drop in 2016 from $1 to $0.68. This represents a decline of 32%, which, unfortunately, does not meet the stability criterion as it exceeds the 20% threshold. Such a decrease can be concerning for income-seeking investors who prioritize stable dividends. Despite this, the company has maintained the $0.68 per share payout consistently since the cut, showcasing reliability in recent years. Therefore, while there's been a significant minor drop implying temporary instability, the subsequent years have shown resilience and restored confidence to some extent. Income-focused investors must weigh this historical inconsistency alongside the company's recent stable performance when making their investment decisions.

Dividends Paid for Over 25 Years?

This criterion examines whether a company has a consistent history of paying dividends for over 25 years, highlighting its reliability and shareholder commitment.

New York Community Bancorp (NYCB) has demonstrated a robust history of dividend payments over the span of 25 years. Starting from 1998 with a dividend per share of $0.1667, the company incrementally increased its dividends, peaking at $1 per share from 2005 to 2014, before experiencing a cut to $0.68 per share since 2016. This long history of paying dividends, despite the reduction starting from 2016, underscores NYCB's commitment to returning value to shareholders over a sustained period. Such a track record is generally viewed positively as it indicates financial stability and a potential preference for the company among income-focused investors. However, the dividend cut might raise concerns among some investors regarding the future dividend sustainability.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for New York Community Bancorp (NYCB) and why it is important to consider

Evaluate the stock repurchases trend and its reliability based on the numbers provided for the past 20 years: {'year': {'values': ['2003', '2004', '2005', '2006', '2007', '2008', '2009', '2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023']}, 'numberOfShares': {'values': [195982424, 266981955, 263139640, 286261492, 311102992, 335371065, 351939053, 434186499, 436143134, 437712242, 439251238, 440988102, 448982223, 485150173, 487073951, 487287872, 465380010, 462605341, 463865661, 483603395, 713643550]}}, reliable repurchased years last 20 years: ['2005', '2019', '2020'], and average repurchased last 20 years: 7.3617.