Last update on 2024-06-27

PCTEL (PCTI) - Dividend Analysis (Final Score: 5/8)

Comprehensive PCTEL (PCTI) dividend analysis with an 8-criteria scoring system. Current dividend score is 5/8.

Short Analysis - Dividend Score: 5

We're running PCTEL (PCTI) 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 financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

PCTEL (PCTI) boasts a dividend yield of 2.3605%, which is notably higher than the industry average of 1.19%. Over the past two decades, the company's dividend yields have fluctuated significantly, with peak values like 7.6104% in 2008 and 5.1282% in 2018. Comparing it to the industry average, PCTEL has consistently outperformed its peers, especially in recent years where the industry's dividend yield averages have generally hovered around the 1-2% mark. Higher dividends are typically a sign of financial health and a commitment to returning value to shareholders. In comparison, the industry average has seen considerable volatility, with peaks and troughs reflecting broader economic conditions. The current trend in PCTEL's higher dividend yield suggests robustness in its dividend-paying capability, making it an attractive proposition for income-focused investors. The consistent payout over the years is a good indicator, although prospective investors should consider the sometimes erratic nature of past yields.

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

The Dividend Growth Rate is an important metric for evaluating the potential for income generation from dividends over time. A higher growth rate generally indicates the company's ability to increase dividends, reflecting positive financial health and profitability. Examining a 20-year period provides a long-term view, which mitigates short-term fluctuations and offers a clearer picture of dividend sustainability.

The Dividend Growth Rate for PCTEL (PCTI) based on the provided Dividend Per Share Ratio data shows a highly volatile pattern with significant fluctuations, including several years where dividends were not paid or reduced. Specifically, between 2003 and 2023, the growth rate was substantially negative some years, with notable dips (e.g., in 2009 and 2023 by -100% and -25%, respectively). Although the average Dividend Ratio is 11.46%, the extreme volatility undermines this figure. Overall, this trend is not consistent with a stable or reliable dividend growth rate above 5%, indicating potential financial instability and unpredictability in dividend payments.

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

The payout ratio is the proportion of earnings paid out as dividends to shareholders, usually expressed as a percentage.

Analyzing the payout ratio data from 2003 to 2023, we see significant fluctuations. The 20-year average is 143.30%, far exceeding the recommended threshold of 65%. Significant outliers, notably in 2021 with a ratio of 2619.05%, distort the average. This trend is alarming as it suggests that PCTEL often paid dividends exceeding their net income, an unsustainable practice potentially detrimental to long-term financial health.

Dividends Well Covered by Earnings?

Evaluating whether dividends are well covered by earnings is crucial as it indicates the company's ability to sustain its dividend payouts. A healthy coverage suggests financial stability.

The data for PCTEL (PCTI) shows a mixed trend in terms of 'Dividends per Share covered by Earnings per Share.' Notably, in years like 2013, 2014, 2015, 2017, 2019, and so forth, the coverage ratios were positive, indicating that the earnings could adequately cover the dividends. For instance, in 2019 and 2020, the ratios were over 1 (1.065 and 1.191, respectively), which implies excellent coverage. However, in years like 2015 (-2.26) and 2016 (-0.18), the ratios were negative, meaning the company had insufficient earnings to cover the dividends. Thus, while there have been years of strong coverage signaling good financial health, the volatility and instances of negative coverage suggest looming uncertainties. Overall, the trend can be viewed as cautiously optimistic but demands close monitoring in volatile periods.

Dividends Well Covered by Cash Flow?

Examining whether dividends are sufficiently covered by free cash flow tests a company’s operational efficiency and financial stability.

Based on the data, PCTEL (PCTI) has shown varying abilities to cover its dividends with free cash flow. In years when dividends were paid (notably in 2008, 2011-2022), we see a range of coverage ratios. The highest coverages were seen in 2012 (1.32x) and 2021-2022 (1.20x and 1.22x, respectively), indicating strong free cash flows covering the dividends robustly. Conversely, years with low or zero coverage point to unsustainable dividend policies. Despite the fluctuations, recent trends show improved coverage, which is positive for financial health.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividend payments over a period of 20 years, where dividends do not drop by more than 20%, illustrate financial robustness and reliable income streams. This is crucial for income-focused investors seeking consistent returns.

Analyzing the dividend per share data for PCTEL (PCTI) over the past 20 years, it becomes evident that in the years 2009 (dividend cut to zero) and 2023 (dividend decrease to $0.165 from $0.22), the company experienced drops that potentially exceed 20%. This break in stability might concern income-seeking investors. For instance, the 2023 dividend reduction represents a decrease of approximately 25%. Such declines could indicate challenges in earnings stability or cash flow management, rendering the stock less attractive for those prioritizing dependable dividend income.

Dividends Paid for Over 25 Years?

Examining whether a company has paid dividends for over 25 years helps identify dividend stability and a shareholder-friendly management. This long-term commitment can signal reliability.

PCTEL (PCTI) has not paid dividends consistently over a 25-year period. The data indicates that dividends were first issued in 2008 and intermittently since then, achieving some regularity only from 2014 onward. With dividends per share increasing from $0.5 in 2008 to $0.165 in 2023, this trend illustrates some stability in recent years but falls short of the 25-year evaluation period. Therefore, PCTI does not meet the criterion for having a 25-year dividend payment history, but the recent consistency could indicate a positive direction.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases signal a company's confidence in its financial health and are key for creating shareholder value.

Over the past 20 years, PCTEL (PCTI) has demonstrated 9 years of share repurchases, typically signaling positive financial health and a commitment to returning value to shareholders. Though its overall average repurchase rate stands at -0.3722, the intermittent nature of repurchases should be further examined for trends. The observed years of significant stock repurchases—2004, 2008, 2009, 2010, 2012, 2015, 2016, 2021, and 2023—suggest periods of strong cash flow or strategic corporate actions. For instance, in 2008, a repurchase was likely strategic amidst market instability. However, another perspective reveals an overall trend of share reduction only averaging around 37%, suggesting potential operational or market challenges. Contextual historical events should also be scrutinized for comprehensive insights. More recent repurchases raise questions on sustainability, requiring analysis alongside revenue, earnings, and future outlook.