Last update on 2024-06-27

Regency Centers (REG) - Dividend Analysis (Final Score: 2/8)

Explore the dividend stability and performance analysis of Regency Centers (REG) using an 8-criterion scoring system, scoring 2/8 for 2023.

Short Analysis - Dividend Score: 2

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

The dividend analysis for Regency Centers (REG) used an 8-criteria scoring system and resulted in a score of 2. Here's a breakdown: 1. Dividend Yield: REG's yield of 3.9104% is slightly lower than the industry average of 4.15%. 2. Dividend Growth Rate: DIV growth is inconsistent and often below the desired 5%. 3. Average Payout Ratio: REG's 20-year average is about 213%, significantly higher than the ideal 65%. 4. Dividend Coverage by Earnings: Generally covered, though with some challenges during economic turmoil. 5. Dividend Coverage by Cash Flow: Improved significantly post-2009, indicating better sustainability. 6. Stability of Dividends: REG shows notable stability and resilience through economic downturns. 7. History of Payments: Continuous dividend payments for 25 years. 8. Stock Repurchases: No details were provided on REG's repurchase consistency.

Insights for Value Investors Seeking Stable Income

Given the results, investors with a focus on dividends might approach Regency Centers (REG) with caution. The lower-than-average yield and highly variable growth rate, combined with a very high payout ratio, raise concerns about long-term dividend sustainability. However, the company has demonstrated resilience with continuous dividend payments over 25 years and improved cash flow coverage. It might be worth investigating further if you're interested in its historical reliability, but it doesn’t stand out as a strong performer based on these analyses alone.

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?

How a stock's dividend yield compares to its industry average benchmark.

Regency Centers' (REG) current dividend yield of 3.9104% is slightly lower than the industry average of 4.15%. This is somewhat concerning, given that Regency's dividend yields have historically been higher or close to the industry average, especially during times of economic turmoil—as evidenced by 2008 when the yield was 6.2099% while the industry hit an unusual high of 9.19%. The lower yield might suggest underperformance in stock price or reduced dividend growth relative to peers, indicating less attractive returns for income-focused investors.

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

The Dividend Growth Rate measures how the dividend payout has increased over a certain period. Investors look for a consistent increase, typically greater than 5%, as it signifies strong and stable financial health.

The dividend growth rate for Regency Centers (REG) shows significant variability over the past 20 years. Key observations include years with high growth rates such as 2006 (8.1818), 2007 (10.9244), and 2014 (3.1915). However, this period also includes years of negative or zero growth rates, such as 2008 (-27.1034), 2009 (-12.3936), and 2020 (1.7094). The lack of consistent growth and value dips indicate fluctuations in financial stability, which is not considered good for investors looking for steady income growth. With an average dividend ratio of 1.549, REG’s growth rate falls well below the desired 5% mark, indicating poor performance on this criterion.

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 its shareholders in dividends. It is crucial to keep this ratio sustainable.

Regency Centers (REG) has an average payout ratio of approximately 213% over the last 20 years, which is significantly higher than the desirable threshold of 65%. This high payout ratio indicates that, on average, the company is distributing more in dividends than it earns, potentially signaling financial instability. This trend is notably bad, as it suggests that the company may not have sustainable earnings to cover its dividend payments in the long run, raising concerns about future dividend payments and overall financial health.

Dividends Well Covered by Earnings?

It is important to ensure that dividends are well covered by earnings to guarantee the sustainability of dividend payments.

Dividends per share were generally covered by earnings per share (EPS), albeit with several instances indicating potential concerns. For example, in 2009, the EPS was -$0.44 while the dividend per share was $2.11, meaning the company paid dividends despite posting a loss, leading to a coverage ratio of -4.79. Such negative ratios were anomalies during the financial crisis, which shows resilience in maintaining dividends. Other significant trends like 2020 showcase an EPS of $0.27 against a dividend of $2.38, a notable coverage ratio of 8.97, likely reflecting a short-term impact. Conversely, coverage ratios rebounded in subsequent years with rates between 0.75 to 2.03, indicating improved alignment of EPS with dividends rendering more sustainable payouts. Hence, on aggregate, dividend coverage is generally satisfactory though accentuated by challenges during economic upheavals.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow evaluate if a company's free cash flow is sufficient to cover its dividend payouts, ensuring the dividend sustainability.

In 2003 through 2008, Regency Centers (REG) had negative free cash flow, with notably low coverage ratios like -0.6779 in 2003 and -0.7139 in 2004. These values show the company was struggling to cover dividends out of cash flow. Significant improvement appeared from 2009 forward, with positive cash flow and much higher coverage ratios, peaking in 2009 at 3.6157. Since 2012, the ratio stabilized around 0.6 to 0.7. The recent 2023 ratio of 0.6344 indicates a moderate but stable coverage, showing ongoing improvement and better sustainability of dividends, which is a positive trend.

Stable Dividends Since the Company Began Paying Dividends?

The stability of dividends over the past 20 years refers to the consistency and reliability of the dividend payments made by a company annually, without any drops exceeding 20%.

Regency Centers (REG) has demonstrated notable stability in its dividend payments over the last 20 years. Reviewing the period from 2003 to 2023, there were two particularly notable declines: one in 2009 and another in 2010. Despite these fluctuations, REG managed to maintain its overall dividend payout within a stable range and avoided any single-year drop exceeding 20% since then. Specifically, in 2008, dividends were at $2.90 per share and dropped to $2.114 in 2009, marking a significant decline but not exceeding the 20% cutoff over the comparison span. Post-2010, dividends illustrated a clear resilience and a steady upward trajectory, increasing from $1.852 to $2.62 in 2023. This trend indicates a robust performance and REL's commitment to progressively rewarding its shareholders, marking it favorably for income-seeking investors.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years measures a company’s ability to consistently return value to its shareholders.

Regency Centers (REG) has demonstrated remarkable consistency in its dividend payments over the past 25 years. As we look at the data from 1998 to 2023, we can see a continuous record of dividend payments. This indicates strong financial health and a commitment to providing shareholder value. Despite the economic challenges, such as the dip during the 2008 financial crisis and the COVID-19 pandemic impacts in 2020, the company maintained its dividend distribution. The consistency not only fosters investor confidence but also makes Regency Centers an attractive option for dividend-focused portfolios. Therefore, this trend of uninterrupted dividends over such an extended period is deemed highly favorable.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Regency Centers (REG) and why it is important to consider

Reliable stock repurchases are a sign of shareholder-friendly management. By consistently repurchasing shares, a company can increase Earnings Per Share (EPS), support its stock price, and show confidence in its own financial stability. This can be particularly attractive to investors looking for steady returns.