Last update on 2024-06-28

Patrizia (PAT.DE) - Dividend Analysis (Final Score: 4/8)

Patrizia (PAT.DE) dividend analysis in 2023 scores 4/8, indicating a mixed but improving dividend stability and growth with positive recent trends.

Short Analysis - Dividend Score: 4

We're running Patrizia (PAT.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The analysis of Patrizia (PAT.DE) shows that while the company has a promising dividend yield well above the industry average at 4.0244%, the performance and stability have been inconsistent over the long term. Key points include: high dividend yield driven partially by a declining stock price, a low average payout ratio over 20 years but recent instability, fluctuating dividend and earnings coverage, and historically volatile dividend payments. Additionally, the company has not met the 25-year dividend payment mark but has shown a reliable stock repurchase trend over recent years.

Insights for Value Investors Seeking Stable Income

Given the erratic dividend history, high liquidity but recent instability and volatility, potential investors should exercise caution with Patrizia (PAT.DE). Although there are positive signs like a strong dividend yield and robust stock repurchase strategy, more consistent performance and a longer track record are needed before considering it a reliable dividend investment. It could be worth monitoring for signs of stabilization and growth in the future.

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 measures the annual dividends paid by a company as a percentage of its stock price. It is an important metric to assess the return on investment for shareholders.

Patrizia's current dividend yield of 4.0244% surpasses the industry average of 2.99%, indicating a better-than-average return for shareholders based on dividends. However, an analysis of the past 20 years shows sporadic dividend payments, with many years recording zero dividends. Only recently has the yield markedly improved. The upward trend in the dividend yield over the last few years—particularly since 2020—suggests a growing commitment to returning value to shareholders. Conversely, this should be interpreted with caution due to the stock price's downtrend from a high of €26.25 in 2020 to €8.20 in 2023, which influences the dividend yield. Thus, the high current dividend yield might partially be a result of a declining stock price rather than increased dividends, calling for a deeper look into the company's financial health and future dividend sustainability.

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

Criterion 1.1: The Dividend Growth Rate is higher than 5% in the last 20 years? Explain the criterion for Patrizia (PAT.DE) and why it is important to consider

The criterion of a 5% dividend growth rate over 20 years is a measure of a company’s ability to consistently increase the dividends it pays its shareholders, reflecting its long-term profitability and stability.

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

The Average Payout Ratio measures the proportion of earnings a company pays to shareholders in the form of dividends, with a value below 65% being generally favorable as it suggests sustainable dividend payments.

Over the last 20 years, Patrizia's average payout ratio has been 32.924285%, which is substantially below the 65% threshold. This is a positive indicator, as it suggests that the company has been maintaining a relatively low and sustainable level of dividend payouts. Such a conservative payout strategy can signify that the company retains a higher portion of its earnings for reinvestment into the business, which might bode well for future growth and stability. Analyzing the year-by-year data provided, it's evident that from 2004 through 2018, the payout ratio was consistently at 0%, likely indicating that dividends were not paid out during those years. This changed starting from 2019, where the payout ratios began to fluctuate but remained generally within a reasonable range until a significant spike in 2022 (69.3117%) and a drastic jump in 2023 (111.8777%), followed by 0% in 2024, likely resulting from either an extraordinary payout or significantly reduced earnings. Overall, the low average payout ratio is a good trend, but the recent high fluctuations warrant further scrutiny into what drove those substantial changes in 2022 and 2023 to ensure they do not signal underlying distress or unsustainable practices.

Dividends Well Covered by Earnings?

For dividends to be sustainable and to signify the operational health of a company, earnings per share (EPS) should adequately cover dividend payouts. A high dividend coverage ratio suggests financial stability.

The dividend coverage ratio (EPS divided by the dividend per share) shows whether earnings are sufficient to cover dividend payouts. For Patrizia (PAT.DE), there were years without dividend coverage, e.g., 2017 (0.4385) and 2018 (0.4650), both had low coverage ratios. Although there is a positive trend since 2019 (2019: 0.6931, 2020: 1.1187, 2021: 3.8694), the significant drop in 2022 (coverage becomes 0) is alarming. This inconsistency indicates volatility in earnings and dividends. Improving such a ratio would reinforce investor confidence.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that the company generates enough cash flow to cover its dividend payments, which is crucial for financial stability and investor confidence.

By examining the data from Patrizia (PAT.DE), we can ascertain how well its dividends are covered by its free cash flow over the past two decades. The free cash flow has shown a fluctuating trend from negative values in the early and mid-2000s to positive figures in subsequent years. In particular, though 2006 and 2007 saw significant negative values, the subsequent years portray a recovery. For instance, in 2016, free cash flow rose to an impressive €497.78 million. On the payout front, Patrizia's dividends also began from 2015 onwards, aligning with the €21.1 million payout. Using the ratio of dividends to free cash flow as a gauge, there have been years where coverage was extremely conservative (closer to zero or negative coverage indicates dividends weren't backed by cash flow). Notably, this situation improved remarkably in 2017, reflecting a coverage ratio spike of 1.6267 and has somewhat normalized with positive, albeit volatile, results in the subsequent years. However, coverage ratios indicating divis completely insulated by cash flow (especially values above 100%) are particularly unhealthy in the long run, suggesting potential operational challenges. Overall, while positive cashflow coverage is reassuring, Patrizia's erratic cashflow trends do entail some caution for future dividend stability.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Patrizia (PAT.DE) and why it is important to consider

Stability in dividend payments is paramount for income-seeking investors as it ensures a reliable income stream. For Patrizia (PAT.DE), examining the dividend payment history over the past 20 years reveals fluctuations, most notably with no dividends paid from 2004 to 2014, and significant growth thereon. This growth indicates positive performance, but the numerous years of no dividend payment prior is a negative indicator for stability.

Dividends Paid for Over 25 Years?

Evaluating whether a company has paid dividends consistently for over 25 years is crucial. It signals financial stability, profitability, and a shareholder-friendly policy, all of which are attractive to long-term investors.

Analyzing the dividend payment history of Patrizia (PAT.DE), we see that the company initiated dividends in 2007 but did not consistently pay them until 2014. Despite this late start, the dividends have grown steadily and significantly since then, rising from €0.15 per share in 2007 to €0.33 per share in 2023. Nevertheless, Patrizia's track record does not meet the criterion of paying dividends consistently for over 25 years. This relatively short history of dividend payments signals emerging reliability but requires more time to build a reputation for long-term stability. Consequently, while recent performance is promising, this criterion of long-term consistency is not yet fulfilled.

Reliable Stock Repurchases Over the Past 20 Years?

This criterion assesses the company's consistency in repurchasing its shares over a long period, demonstrating its commitment to returning value to shareholders and potentially increasing earnings per share.

Evaluating Patrizia's stock repurchase trend over the last 20 years, several annual reductions in share count are notable in 2017, 2018, 2020, 2021, and 2022. The share count decreased from 91,047,331 in 2017 to 88,024,971 in 2022, with an average repurchase marker of 39.7276 million shares. Comments suggest positive overall decreases in outstanding shares, bolstering investor confidence, positively reflecting earnings per share trend, and underscoring disciplined capital allocation by the company. Generally, a consistent and focused share repurchase strategy is observed favoring shareholder value enhancement. Patrizia's repurchase trend is positive, showing reliable execution and commitment.