Last update on 2024-06-27

Prologis (PLD) - Dividend Analysis (Final Score: 3/8)

Analyze the performance and stability of Prologis (PLD) dividend policy. Compare dividend yields, growth rates, and coverage ratios over 20+ years.

Short Analysis - Dividend Score: 3

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

Prologis (PLD) got a score of 3 out of 8 criteria in assessing its dividend performance and stability. While the company's dividend yield has been increasing, it still sits slightly below the industry average. The average annual growth rate of the dividends is below 5%, indicating volatility and instability. The payout ratio fluctuates significantly, often exceeding the desired 65%, displaying inconsistency. However, dividends are generally well-covered by cash flow indicating financial prudence. Though stable post-2009, dividends fell sharply during the financial crisis. Prologis has paid dividends for over 25 years but shows limited stock repurchases, which casts doubt on its commitment to shareholder value.

Insights for Value Investors Seeking Stable Income

Prologis presents both strengths and weaknesses in its dividend policy. Despite scoring low in certain stability measures, it has shown resilience and recovery since the financial crisis. Its consistent dividend pay-out over 25 years and positive cash flow coverage are commendable. However, the lower-than-average industry yield, inconsistent growth rate, and limited stock repurchases make it less appealing for dividend-focused investors. Though worth consideration, potential investors should closely examine Prologis’s historical financial stability and future growth prospects.

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 compares the dividends paid to shareholders relative to the stock price. This is a crucial metric for income investors.

Prologis (PLD) currently has a dividend yield of 2.6107%, which is slightly lower than the industry average of 2.86%. Over the past two decades, Prologis's dividend yield has fluctuated, reaching as high as 6.661% in 2008, during the financial crisis, and dropping to as low as 1.4968% in 2021. The current dividend yield of 2.6107% shows an increase from the 2021 yield, indicating a potentially positive trend. However, this is still below the industry average, which may concern income-focused investors. Notably, the industry average yield has also seen fluctuations, reaching a peak of 7.67% in 2008 and dipping to 2.16% in 2021. The trend within Prologis and the wider industry suggests a general recovery trend in dividend yields since the economic downturn caused by the COVID-19 pandemic. Considering the stock price, which has seen significant appreciation from $32.88 in 2003 to $133.3 in 2023, the lower dividend yield can partially be attributed to the rising stock price. It's also important to note that the dividend per share has consistently increased, from $1.66 in 2003 to $3.48 in 2023, showcasing a strong willingness and capability of Prologis to return capital to its shareholders. In summary, while Prologis's current dividend yield is slightly below the industry average, the overall trend of dividend increases suggests a sustainable and growing return for shareholders. This, paired with substantial stock price gains, paints a picture of a fundamentally strong company that has rewarded its investors over the long term.

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

The Dividend Growth Rate represents the annualized percentage rate of growth of a company's dividend over a specified period. A consistent dividend growth rate above 5% over the last 20 years suggests the company is frequently increasing its dividend, indicating healthy cash flows, profitability, and a commitment to returning value to shareholders.

Analyzing the figures provided from 2003 to 2023, Prologis (PLD) exhibits a highly volatile dividend trend, including instances of negative growth and years with no dividends at all. For example, between 2008 and 2011, no dividends were paid, reflecting a challenging financial period, likely due to the global financial crisis. Conversely, there were years with abnormally high growth spikes, such as -22 in 2008 and 25.3968 in 2022. Given the average dividend ratio of approximately 4.36%, this figure falls below the desired 5% threshold for long-term growth and stability. This inconsistent dividend policy demonstrates that Prologis has faced substantial volatility, potentially raising concerns for dividend-focused investors. Although there are years with substantial increases, the long-term average growth rate doesn't consistently exceed 5%, thereby indicating that Prologis' dividend strategy may be viewed as unstable by long-term investors.

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

Discuss the importance of maintaining an average payout ratio below 65% over a span of 20 years for a company like Prologis (PLD).

The average payout ratio over the last 20 years for Prologis (PLD) is calculated at -6.45%. However, the individual yearly payout ratios show significant fluctuations, often exceeding the 65% threshold and even reflecting negative values during some years. Notably, infrequent high ratios such as 102.62% in 2003, 669.05% in 2010, and -1296.30% in 2012 skew the average. These fluctuations reveal periods of potential cash flow distress or exceptional financial events rather than consistent financial prudence. Consequently, PLD doesn't meet the criterion of maintaining an average payout ratio below 65%, which is generally considered ideal to ensure dividend sustainability while retaining earnings for growth. This inconsistent trend raises concerns over PLD's dividend stability and highlights a volatile payout policy.}}]}_GENERATED ẹniassistant to=functions.Finance loyjson працций функциониอกจากนี้mernоProsubsitionफ़िर्त्रनीमैंकालिहAnyReemaНденивината

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings and why it is important to consider

Earning per Share: {'year': {'values': ['2003', '2004', '2005', '2006', '2007', '2008', '2009', '2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023']}, 'earningsPerShare': {'values': [1.6176, 1.4698, 2.9338, 2.4594, 3.1486, -0.5062, -0.3201, 0.1674, -0.414, -0.0864, 0.6976, 1.2563, 1.6283, 2.2133, 2.9917, 2.7944, 2.4945, 2.0346, 3.976, 4.2828, 3.3096]}} Dividend per Share: {'year': {'values': ['2003', '2004', '2005', '2006', '2007', '2008', '2009', '2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023']}, 'dividendPerShare': {'values': [1.66, 1.7, 1.76, 1.84, 2, 1.56, 1.12, 1.12, 1.12, 1.12, 1.12, 1.32, 1.52, 1.68, 1.76, 1.92, 2.12, 2.32, 2.52, 3.16, 3.48]}} Dividends pers Share coverd by Earning per Share : [1.0262116716122651, 1.1566199482922845, 0.5999045606380803, 0.748149955273644, 0.6352029473416757, -3.0817858553931257, -3.498906591690097, 6.690561529271208, -2.705314009661836, -12.962962962962964, 1.6055045871559634, 1.0507044495741464, 0.9334889148191365, 0.7590475760177111, 0.5882942808436675, 0.6870884626395648, 0.8498697133694127, 1.1402732723876927, 0.6338028169014085, 0.7378350611749324, 1.0514865844815082]

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

The coverage ratio of dividends by free cash flow from 2003 to 2023 illustrates a remarkable transformation for Prologis (PLD). Initially, the company faced severe deficits where the dividends were not only inadequately covered by cash flow but were exceedingly negative—for instance, -0.989 in 2009 and a disastrous -7.73 in 2010. However, starting from 2012, the scenario improved dramatically with the ratio surpassing unity (1.48) and most years thereafter maintaining healthy coverage ratios in the range of 0.59 to 0.62. Particularly in 2023, the ratio stands at a stable 0.60. This long-term trend signifies a prudent realignment in financial management, underscoring the company's robust free cash flow generation to sustainably cover its dividend commitments. This shift is commendable and reflects positively on Prologis’s fiscal prudence and strategic capital deployment.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividends is important because it indicates the company's reliability in returning value to its shareholders.

Prologis (PLD) has shown a stable and consistent dividend payout over the past two decades, as evidenced by the historical data. The dividend per share experienced a significant drop in 2009 following the financial crisis, where it decreased from $2.00 in 2007 to $1.56 in 2008, and further to $1.12 in 2009. This drop represents a decline of more than 40% from its peak. However, since 2009, the company has displayed a strong recovery and has consistently increased its dividends year-over-year, climaxing at $3.48 in 2023. This trend is positive for income-seeking investors, showing resilience and a commitment to returning value to shareholders. Despite the early drop, the company's ability to recover and resume growth in dividends presents an overall favorable trend.

Dividends Paid for Over 25 Years?

Explanation of the importance of having paid dividends for over 25 years.

Having a consistent dividend payout over 25 years shows long-term financial health and commitment to returning value to shareholders. It often indicates stability and trustworthy management.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company’s effort to increase shareholder value and boost earnings per share.

Over the past 20 years, Prologis (PLD) has repurchased shares only once in 2008. The number of shares fluctuated, generally increasing from 82.85 million in 2003 to 924.35 million in 2023. This trend is concerning as consistent repurchases can be a sign of a strong financial position and commitment to returning value to shareholders, which Prologis has not demonstrated.