Last update on 2024-06-27

Healthpeak Properties (PEAK) - Dividend Analysis (Final Score: 2/8)

Healthpeak Properties (PEAK) dividend analyzed using an 8-criteria scoring system, scoring 2/8. Reveals unstable dividends and financial inconsistency.

Short Analysis - Dividend Score: 2

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

Healthpeak Properties (PEAK) was evaluated based on 8 criteria to assess its dividend performance and stability. It has a decent current dividend yield of 6.0606%, though slightly below the industry average. The historical growth rate of dividends, however, is unstable, with a negative average growth rate indicating unreliable annual increases. The payout ratio is exceedingly high at 193%, suggesting financial strain in maintaining dividend payments. Additionally, both earnings and cash flow coverages of dividends have been inconsistent over two decades, showing several years where dividends were not effectively covered. Stability of dividends has been mixed, with significant drops in certain years. On a positive note, PEAK has paid dividends consistently for over 25 years, demonstrating long-term commitment to shareholders. However, the company has not engaged in reliable stock repurchases, indicating potential dilution rather than capital returns to shareholders.

Insights for Value Investors Seeking Stable Income

Given the fluctuating dividend yields, inconsistent dividend growth, extremely high payout ratios, and inadequate coverage of dividends by earnings and cash flow for many years, Healthpeak Properties (PEAK) exhibits several red flags indicating financial instability. While the long-term consistency in dividend payments is commendable, the lack of reliable share repurchase programs further signifies potential dilution for existing shareholders. Investors looking for stable and reliable income might consider other options. For those already invested, keeping a cautious eye on financial health and making decisions based on individual risk tolerance is recommended.

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 measures the annual dividends paid out by a company relative to its stock price. It is an important indicator for income-seeking investors.

Healthpeak Properties (PEAK) has a current dividend yield of 6.0606%, which is slightly lower than the industry average of 6.2%. Over the past 20 years, Healthpeak's dividend yield has shown fluctuations. At its peak, the yield reached 6.5727% in 2005 and dipped to a low of 3.325% in 2021. Despite these fluctuations, Healthpeak's yield has often been competitive with or above the industry average. This trend indicates a historically strong track record in terms of dividend payments, making it a potentially attractive option for investors looking for steady income. However, the recent yield being lower than the industry average might raise some concerns, though it remains relatively high.

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

Dividend growth rate reflects the annualized percentage increase in a company's dividend payout. It’s crucial as it signifies the company’s ability to generate and return profits consistently.

The data reveals a highly erratic dividend payout for Healthpeak Properties (PEAK) over the past 20 years, with some negative values and even zero dividends in certain years. The Dividend Per Share has experienced severe fluctuations, leading to an average growth rate of approximately -0.72%, which is far from the desired 5%. This instability reflects poorly on the company’s consistency and reliability in returning profits to shareholders. It suggests underlying financial or operational challenges. Investors seeking stable, reliable income may consider this trend unfavorable.

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

The Average Payout Ratio below 65% indicates a balanced distribution policy without overextending finances.

The payout ratio reveals how much of a company's earnings are distributed as dividends. For Healthpeak Properties (PEAK), the average payout ratio is exceptionally high at 193.0943%, notably above the ideal threshold of 65%. Over the past 20 years, the payout ratios have fluctuated greatly, with certain years like 2015 showing even negative values and others, such as 2009 and 2019, showing excessively high percentages of 353.4613% and 1581.1966%, respectively. These swings in payout ratios are signs of potential financial instability or inconsistent earnings. High payout ratios often mean that the company is returning more money to shareholders than it earns, a practice that may endanger long-term sustainability if not matched by consistent profits. This trend indicates a precarious financial strategy for PEAK, leaning heavily on dividend payouts at the risk of impairing reinvestment in growing or maintaining the business.

Dividends Well Covered by Earnings?

Dividends being well covered by the earnings are crucial for ensuring that the company can sustain its dividend payments without compromising its financial health. It indicates the reliability of dividend payouts.

The Dividend Per Share (DPS) being well covered by the Earnings Per Share (EPS) over the years reflects Healthpeak Properties’ capability to sustain its dividend distribution. From the data, the coverage varies significantly across the years with examples like 2.4046 in 2003 and an exceptional 15.812 in 2019. However, downturns such as the negative coverage of -1.703 in 2015 and other instances where the coverage falls below 1, signal potential vulnerabilities and inconsistency in earnings relative to dividends. Ideally, a consistently high coverage ratio is more desirable. The trend in the more recent years from 2020 to 2023 depicting coverage ratios from 1.8986 to 2.1451 signifies a stabilizing and potentially healthy sign for reliable dividends sustainability in the future. Overall, sustaining these positive coverage ratios will reinforce investor confidence.

Dividends Well Covered by Cash Flow?

For the healthy continuation of dividends, they should be well-covered by the company's free cash flow, ensuring stability and potential for growth.

From 2003 to 2023, Healthpeak Properties exhibited varied trends in their ability to cover dividends with free cash flow. During the early 2000s, particularly 2004 to 2007, the company had negative free cash flow, which means that they relied heavily on debt or equity financing to cover dividends, marking a risky period for dividend stability. However, from 2008 onwards, there's a noticeable shift, with the free cash flow generally positive and sufficient to cover dividends. For instance, 2008 and 2009 saw a significant turnaround in free cash flow of $353M and $378M respectively, and the coverage ratio remained above 1, indicating dividends were more than adequately covered. Although the coverage fluctuated, values closer to 1 or above suggest reasonable coverage; years like 2016 and 2019 saw ratios of 0.806 and 0.851 respectively, balancing dividend stability with operational cash stream. Recent trends, particularly from 2020 to 2023, highlight a stabilization with ratios modestly under 1, taking 2023 for example at 0.687, showing that the dividends are nearly covered but might indicate some pressure if free cash flow doesn’t see growth. Overall, Healthpeak Properties has shown improved financial discipline concerning dividend coverage post-2008, indicating a positive trend towards financial health, though careful monitoring remains vital.

Stable Dividends Since the Company Began Paying Dividends?

You need to explain the importance of stable dividends for a Real Estate Investment Trust (REIT) like Healthpeak Properties (PEAK).

Over the past 20 years, Healthpeak Properties (PEAK) has shown a varied pattern in its dividend payments. For instance, from 2003 to 2008, there was a steady increase in the dividend per share, with slight increments every year. This depicted a healthy growth pattern for an income-seeking investor. However, in 2015 it dropped significantly to $1.48 from $2.0583 in 2014 and then remained constant till 2018, signaling a dividend payout adjustment period. The significant drop occurred again in 2021 to $1.2, and this has stayed constant till 2023. The lack of dividends dropping more than 20% any in of the given years indicates the efforts made by the company's management to maintain stable returns, reflecting consistency and reliability. This trend, despite a few marked reductions, shows a dedication to shareholder value, though the drops can be concerning for those strictly in search of high and growing dividends. This overall pattern is mixed for an income-oriented investor, highlighting the need for thorough assessment beyond just dividend stability.

Dividends Paid for Over 25 Years?

Consistency in dividend payments over a span of 25 years indicates a stable and reliable company. This is attractive to investors seeking steady income.

Healthpeak Properties (PEAK) has a commendable track record of paying consistent dividends for over 25 years. From 1998 to 2023, the company has provided dividends without fail, showcasing its commitment to returning capital to shareholders. Although the dividend per share slightly decreased from $1.941 in 2017 to $1.2 in recent years, the overall trend demonstrates resilience, especially considering external economic pressures and industry-specific challenges. This long-term dividend payment trend is a positive indicator for potential and current investors focused on dividend stability and reliability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases refer to a company's consistent buyback of its own shares over an extended period. It signals financial health, returning value to shareholders.

Analyzing Healthpeak Properties (PEAK) over the past 20 years, the data indicates only a couple of years (2004 and 2022) when stock repurchases were done. The trend shows a predominant increase in the number of shares from 252.26 million in 2003 to 547.006 million in 2023. This is not indicative of reliable stock repurchases, as consistent buybacks usually aim to reduce or maintain the number of outstanding shares. Instead, PEAK has seen a significant dilution, particularly from 2010 onwards where shares increased from 306.9 million to 547.006 million in 2023. This general trend is unfavorable. A higher average share count (5.4%) suggests stock issuance has outweighed buybacks, reflecting potential capital raises or stock-based compensations, not a shareholder-friendly buyback policy.