Last update on 2024-06-27

Paramount Global (PARA) - Dividend Analysis (Final Score: 5/8)

In-depth analysis of Paramount Global's (PARA) dividend policies, covering yield, growth rate, payout ratios, and stability. Final score: 5/8.

Short Analysis - Dividend Score: 5

We're running Paramount Global (PARA) 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?

Dividend yield is a key measure showing how much a company pays out in dividends each year relative to its stock price. It reflects the return on investment for shareholders from dividends alone.

Paramount Global (PARA) exhibits a robust dividend yield of 2.6369%, significantly outperforming the industry average of 0.96%. Analyzing the data from the last two decades reveals that the company has had a fluctuating but generally upward-trending dividend yield. Key peaks can be observed in 2008 at 12.9426% and more recently in 2022 at 5.6872%. Despite a dip to 0.7531% in 2013, the latest yield of 2.6369% signifies a resilient capability to return value to its shareholders. This higher-than-average yield is a positive indicator for investors seeking income from dividends, suggesting superior performance compared to peers.

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

The Dividend Growth Rate measures the annualized percentage rate of growth of Paramount Global's dividend payouts per share. A higher growth rate, particularly above 5%, indicates a strong, consistent return to shareholders.

Analyzing the Dividend Ratio over the last 20 years, it's apparent that the values are highly volatile, with significant fluctuations including negative numbers. The average Dividend Ratio is 8.08%, which suggests some level of growth but doesn't necessarily translate to consistent annual growth above 5%. The presence of years with zero or negative ratios complicates the picture. Thus, while on average the ratio is above 5%, the inconsistency and volatility do not represent a stable or secure trend. This trend can be described as volatile and does not provide confidence in a consistently high dividend growth rate.

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

A payout ratio below 65% over an extended period is considered sustainable and indicates that the company is retaining enough earnings to reinvest in growth.

From the data provided, Paramount Global's (PARA) payout ratio has varied significantly over the last 20 years, with a mixture of both positive and negative values. The average payout ratio stands at 21.18%, which is well below the 65% threshold. This indicates a generally conservative approach to dividend payments, ensuring that a substantial portion of earnings is retained within the company for reinvestment. Periods of negative payout ratios may be a result of losses in certain years but do not overshadow the overall trend. This trend is good for potential investors seeking dividend stability and potential company growth.

Dividends Well Covered by Earnings?

The coverage of dividends by earnings is crucial as it shows if a company generates sufficient profit to fund its dividend payments.

From the data provided, Paramount Global (PARA) exhibits significant fluctuations in its EPS (Earnings Per Share). Notably, inconsistencies such as the negative EPS years (2004, 2005, 2008, 2023) juxtaposed with comparatively high dividend payouts suggest that dividends in those years were likely funded by means other than regular earnings, which is typically not a sustainable approach. For instance, in 2023 the EPS was -0.9325, unable to support even a reduced dividend per share of 0.39, leading to a negative coverage ratio of -0.418. It's critical to dive deeper into these years for causes like extraordinary losses, as overall these inconsistencies depict a risky dividend policy reliant on fluctuating earnings, which is not favorable for long-term dividend investors.

Dividends Well Covered by Cash Flow?

Explain the criterion for Paramount Global (PARA) and why it is important to consider

Analyzing whether dividends are well covered by cash flow is critical for assessing the sustainability of those dividends. When dividends are consistently covered by free cash flow, it indicates a company's strong operational efficiency and ability to reward shareholders without compromising its financial stability.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividend payouts over a long period point towards the financial health and predictable cash flow of a company. They are especially crucial for income-focused investors who rely on these dividends as a steady income source. A drop of more than 20% in dividends can signify potential financial instability.

Reviewing the dividend data for Paramount Global (PARA) over the last 20 years, there is one incident to note in 2009 where the dividend per share dropped drastically to 0.2 from 1.06 in 2008, a considerable decrease far exceeding the 20% threshold. Despite recovering in the subsequent years, another notable reduction is observed in 2023 where the dividend per share dropped to 0.39 from 0.96 in 2022. While intermittent increases suggest operational resilience, these drops may raise red flags about underlying volatility and current financial stability. Consequently, this trend points to a concern and instability in PARA’s dividend policy, affecting income-seeking investors.

Dividends Paid for Over 25 Years?

Whether Paramount Global has paid dividends for over 25 years is an important aspect, as it reflects the company's financial stability and long-term focus on returning value to shareholders.

Upon analyzing the dividend payment history of Paramount Global from the provided data, it is clear that the company has not consistently paid dividends for over 25 years. The record shows that dividends started to be paid in 2003 with a per-share dividend of $0.48. Furthermore, there have been fluctuations, such as the decrease during financial instabilities periods like 2009 (dividend dropped to $0.2) and adjustments again during the 2020s as reflected by the lower dividend in 2023 ($0.39). This inconsistent dividend payment history suggests that investors should be cautious and take into account the economic cycles and operational challenges that Paramount Global faces. While it is commendable that the company has been able to provide dividends most years since 2003, the lack of a 25-year history of continuous dividend payments may raise questions regarding its financial resilience over the long term. This trend is neither strictly good nor bad but highlights the company's adaptability and potential volatility. Investors seeking stable and long-term dividend payers might find this a point of concern.

Reliable Stock Repurchases Over the Past 20 Years?

Examining the consistency of stock repurchases, their volume, and the average impact on share count over 20 years helps determine the company's commitment to returning value to shareholders through buybacks.

Paramount Global (PARA) has demonstrated a relatively active stock repurchase program over the past 20 years, with significant share buybacks occurring in years such as 2004, 2005, 2006, 2007, 2008, 2011, 2012, 2013, 2014, 2015, 2016, 2017, and 2018. During these years, the company actively reduced its number of shares outstanding, as indicated by a decreasing trend. Notably, the number of shares decreased from 880.35 million in 2003 to 381 million in 2018. However, there have been fluctuations, and in more recent years (2019 onwards), the share count has increased again, with 652 million shares outstanding in 2023. The average repurchase trend of -0.6395 suggests there was a considerable reduction in shares over the analyzed period, which should have a positive impact on earnings per share (EPS) by distributing profits over fewer shares. Despite this, the recent increase in share count detracts somewhat from the consistency of the long-term trend. Overall, the repurchases signal a shareholder-friendly approach, although the commitment seems to have wavered in the last few years.