Last update on 2024-06-28

Prosus (PRX.AS) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis of Prosus (PRX.AS) with a final score of 5/8. Understand the performance and stability of their dividend policy through an 8-criteria system.

Short Analysis - Dividend Score: 5

We're running Prosus (PRX.AS) 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 an important metric for income-focused investors as it measures how much cash flow you're getting for each dollar invested in an equity position. It serves as an indicator of a company's ability to return value to shareholders in the form of dividends.

Prosus's current dividend yield of 0.2343% is notably lower than the industry average of 0.37%. Over the past few years, Prosus has shown a positive trend in its dividend yield, increasing from 0.1012% in 2020 to 0.2343% in 2023. Despite this improvement, the yield remains below the industry average. This lower yield could be seen as a drawback for income-focused investors, although the rising trend might indicate the company's increasing commitment to dividends.

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

The Dividend Growth Rate is higher than 5% in the last 20 years criteria is important to understand the company's ability to increase dividends consistently. A stable or growing dividend is a sign of the business's good health and its ability to generate profits and return capital to shareholders over time.

The dividend history provided by Prosus (PRX.AS) is quite inconsistent. Since 2011, the company has recorded a dividend per share ratio in only two years: 2021 with 27.3441 and 2023 with 9.0298. Other years show no dividends. Given this inconsistency and the fact that the dividend wasn't paid in most of the years, calculating an accurate Dividend Growth Rate isn't possible. However, the sudden appearance of high dividends in certain years may indicate special dividends rather than a regular dividend policy. Therefore, the current trend for dividend growth over the evaluated period is unfavorable and does not meet the criteria of a growth rate higher than 5% consistently.

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

The average payout ratio indicates the proportion of earnings paid to shareholders as dividends, key in assessing dividend sustainability. A figure below 65% is healthy, implying retained earnings for growth.

Prosus (PRX.AS) has recorded payout ratios at 0% until 2019, with a significantly low average of approximately 1.22% over the years from 2011 to 2023. The average payout ratio being well under the 65% threshold is a positive indicator. This very low payout ratio suggests that the company retained a substantial portion of its earnings, which could be reinvested into the business for expansion or other strategic initiatives. This retention can lead to potential future growth. Thus, the trend here is favorable, as it underscores dividend sustainability while ensuring adequate reinvestment back into the company.

Dividends Well Covered by Earnings?

This criterion evaluates whether a company's earnings per share (EPS) are sufficient to cover the dividends per share (DPS). It indicates the sustainability and reliability of dividend payments.

In 2020, EPS was 1.0645 while DPS was 0.0505, resulting in a coverage ratio of approximately 4.7%. By 2023, EPS was 3.4179 and DPS was 0.07, leading to a coverage ratio of about 2.05%. While these ratios show that only a small portion of earnings are used to pay dividends, the coverage ratio has varied. The downward trend from 2020 to 2021 shows decreasing dividend affordability relative to earnings, suggesting potential concerns for dividend sustainability. Further scrutiny of future earnings trends and operational performance would be warranted.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicate that a company's dividend payments are sustainable and backed by its actual generated cash, ensuring financial stability.

Throughout the years provided, from 2011 to 2023, Prosus (PRX.AS) has shown inconsistent coverage of dividends by free cash flow. Specifically, in years such as 2017, 2018, 2019, 2020, 2022, and 2023, the free cash flow was negative, resulting in negative coverage ratios which suggest that the dividends were not supported by cash flows from operations. This trend highlights a potential risk if the company continues to pay out dividends without sufficient cash flow coverage. The exception is seen in 2021, where the coverage was significantly high at 5.63, indicating strong cash flow support for dividends that year. Volatility in free cash flow and its inability to consistently cover dividends raise concerns about the sustainability of Prosus’s dividend payments over time. Thus, this trend is bad, highlighting potential areas for financial review and strategy adjustments.

Stable Dividends Since the Company Began Paying Dividends?

Stable Dividends Over the Past 20 Years is a measure to ensure that a company has been consistently paying and possibly increasing its dividends. Such stability suggests a well-managed, financially stable company, which is crucial for income-seeking investors who rely on dividends for steady cash flow.

Upon examining the dividend per share for Prosus (PRX.AS) over the past 20 years, we observe that the company did not pay any dividends from 2011 to 2019. The issuance of dividends commenced in 2020 with a dividend per share of 0.0505. This increased modestly to 0.0642 in 2021 and 2022, eventually reaching 0.07 in 2023. The absence of dividend payments for the majority of the two-decade span and the late inception of dividends characterize an unstable dividend history. Given that a drop of 20% is indeed recorded, it emphasizes inconsistency. Therefore, this trend is negative for the criterion of stable dividends, reflecting an unreliable income source for dividend-oriented investors.

Dividends Paid for Over 25 Years?

Dividends paid consistently for over a 25-year period show reliability and the ability of a company to generate predictable cash flows over long periods. It also indicates a strong commitment to returning value to shareholders.

The data provided shows dividend payments from 2011 to 2023. However, it is essential to note that dividends were not paid from 2011 to 2019. Prosus started paying dividends in 2020, with an incremental increase from EUR 0.0505 in 2020 to EUR 0.07 in 2023. Since the company has only a history of three years of dividend payments, it does not meet the 25-year criterion for dividend track record. This is a negative trend for dividend stability, as long-term investors often seek companies with a long history of dividend payments.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

In analyzing the stock repurchase activities of Prosus (PRX.AS) over the past 20 years, it's evident that substantial buybacks have occurred primarily in the last four years (2020-2023), with notable reductions in the number of shares from 5942243080 in 2019 to 2958518019 in 2023. The average repurchase rate of -7.2008, indicates a significant and consistent reduction of shares. A closer look reveals: 1. From 2017 to 2019, the share count remained stable at around 5942243080. 2. Post-2020, a determined effort to reduce share count is apparent, reflected by annual decreases. This trend demonstrates a reliable commitment to enhancing shareholder value through buybacks. This is positive for investors as buybacks can enhance earnings per share and potentially increase stock prices, indicating sound fiscal policies and strong cash flow management.