Last update on 2024-06-27

Robert Half (RHI) - Dividend Analysis (Final Score: 6/8)

Analyze Robert Half's (RHI) dividend performance using an 8-criteria scoring system. The article provides insights into stability, growth, and payout ratios.

Short Analysis - Dividend Score: 6

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

The dividend analysis of Robert Half (RHI) was evaluated using an 8-criteria scoring system to gauge the performance and stability of its dividend policy, resulting in a score of 6 out of 8. Key points from the analysis are: 1. **Dividend Yield**: RHI's current yield is 2.1838%, slightly below the industry average of 2.6%. While their historical yields have shown stability, recent levels have underperformed. 2. **Dividend Growth**: Significant growth in dividends per share from $0.18 in 2004 to $1.92 in 2023. 3. **Payout Ratio**: They've maintained an average payout ratio of 43.3%, which is below the 65% target, indicating good earnings retention for growth. 4. **Dividend Coverage by Earnings**: They have maintained sustainable payout ratios around 30%-50%, showing good earning cover. 5. **Dividend Coverage by Cash Flow**: They have consistently covered dividends with their free cash flow, indicating financial health. 6. **Dividend Stability**: While having increased their dividends over 20 years, with only one notable decrease in 2011, they haven't yet met the 25-year consistent payment mark. 7. **Dividend History**: Continuous dividends since 2004 show stability, but they fall short of a 25-year history. 8. **Stock Repurchases**: They’ve maintained a consistent buyback policy, reducing shares from 159.75 million in 2003 to 105.53 million in 2023, which benefits shareholders.

Insights for Value Investors Seeking Stable Income

Robert Half (RHI) appears to be a stable and reliable company for dividend investors. Despite not having the highest yield in the industry, their consistent increase in dividend payments, controlled payout ratios, solid earnings, and cash flow coverage, along with proactive stock repurchase efforts, place them in a favorable position. However, long-term dividend investors should consider that RHI has not yet met the 25-year dividend consistency mark. If you're a new or income-focused investor, RHI is worth considering, but monitoring their continued performance and consistency in dividend payments will be key.

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. It's important for income-focused investors because a higher yield indicates a better return on investment.

Robert Half's latest dividend yield of 2.1838% is slightly lower than the industry average of 2.6%, suggesting it is not overly competitive in yield terms within its sector. Over the last 20 years, RHI's dividend yield has seen significant fluctuations, with a notable peak of 2.4596% in 2011 and a recent peak of 2.3297% in 2022. While the historical yields indicate a relatively stable upward trend, the fact that recent yields are below the industry average may signal a potential need to re-examine its dividend strategy to attract more yield-seeking investors. However, the constant increase in dividend per share from $0.18 in 2004 to $1.92 in 2023 shows dedication to rewarding shareholders, even if the comparative yield performance is lackluster.

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

Why analyzing the Dividend Growth Rate over the last 20 years is crucial

The provided dividend growth rates,...

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

A payout ratio below 65% indicates that the company is retaining a good portion of its earnings for growth. This offers a cushion during economic downturns and supports future dividend payments.

Robert Half's (RHI) average payout ratio over the past 20 years stands at approximately 43.3%, comfortably below the 65% threshold. Notably, despite experiencing a significant spike in the ratio during 2009 and 2010, which can likely be attributed to the global financial crisis during those years, the company has maintained a disciplined payout strategy. Post-2010, the payout ratio generally trended downwards, consistently staying below 50% in most years. This indicates that Robert Half is efficiently managing its retained earnings and provides a sign of financial health. Such a payout ratio is favorable as it allows the company to reinvest in growth and provides liquidity for future uncertainties. Overall, this trend is very positive for dividend sustainability.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

To determine if Robert Half (RHI) dividends are well covered by earnings, we need to look at the dividend payout ratio, which is the dividend per share divided by the earnings per share (% in ratio form). Generally, a healthy payout ratio is one that is significantly less than 100%, as it indicates that the company is retaining earnings to reinvest into the business which illustrates sustainable dividend payments. For RHI over the years: The trend from 2003 shows that the payout ratio fluctuated considerably. Particularly during the periods of economic downturn, such as 2008, we observe relatively high payout ratios curtailing to 1.88, indicating a stress situation where earnings barely covered the dividends. More recently, from 2013 onwards, despite periodic fluctuations, averages around 30%-50%, showing sustainable earnings cover. A most recent dip in 2023 where EPS 3.89 above implies quite a manageable ratio with remaining earning reinvestment opportunities Nevertheless, quarterly updates are advisable.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

In evaluating whether dividends are well covered by free cash flow, we normally look for a payout ratio below 1. A lower payout ratio implies the company generates sufficient cash to comfortably cover its dividend payments, which signals financial health and sustainability. On the other hand, a higher ratio indicates potential risk of overextension or financial distress.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years

Looking at the dividend per share for Robert Half (RHI) over the past 20 years, the company has demonstrated remarkable stability. The dividends have increased from $0.18 in 2004 to $1.92 in 2023. Notably, there was only one significant drop of 20%, which occurred in 2011 when the dividend per share went from $0.7 in 2010 to $0.6. However, this decline was temporary, and the dividends resumed an upward trajectory thereafter. This long-term trend indicates a strong commitment to returning value to shareholders, which is positive for income-seeking investors.

Dividends Paid for Over 25 Years?

Dividends paid consistently for over 25 years indicate stability and a commitment to returning value to shareholders.

Robert Half (RHI) has been paying dividends continuously since 2004, which amounts to nearly two decades of consistent payouts. Although the 25-year mark has not been reached, the trend is positive. The company's ability to increase dividends from $0.18 per share in 2004 to $1.92 per share in 2023 shows a strong commitment to shareholder returns and profitability growth. Robert Half's trajectory suggests stability and future potential for long-term dividend investors. However, more years of consistent dividend payments are needed to meet the strict 25-year criterion.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Robert Half (RHI) has seen a steady decrease in the number of shares over the past 20 years, from 159,750,000 in 2003 to 105,530,000 in 2023. The trend reflects a consistent stock repurchase strategy, with shares decreasing each year except for a slight increase between 2003 and 2004. The average reduction of -2.0022% per year indicates a robust share buyback policy, which is generally seen positively by investors as it can increase earnings per share (EPS) and indicate confidence in the company's future performance. Overall, this trend is good, as it demonstrates a proactive approach to enhancing shareholder value and signifies the company's healthy cash flow generation.