Last update on 2024-06-27

Rheinmetall (RHM.DE) - Dividend Analysis (Final Score: 6/8)

Analyze Rheinmetall's (RHM.DE) dividend policy using an 8-criteria system. Final Score: 6/8. Learn about performance, stability, and potential risks.

Short Analysis - Dividend Score: 6

We're running Rheinmetall (RHM.DE) 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 essential measure that indicates how much a company pays out in dividends each year relative to its stock price. It is crucial for investors who seek a steady income stream from their investments.

Rheinmetall's current dividend yield is 1.4983%, slightly higher than the industry average of 1.36%. Historically, the company’s dividend yield has shown significant volatility, with a peak of 5.6769% in 2008 and a low of 0.488% in 2015. The maximum yield in the industry is 2.92% in 2010, far below Rheinmetall's peak. However, the downward trend from more recent years, from 2.4079% in 2021 and 1.7737% in 2022 to 1.4983% in 2023, may show increasing concerns. The relatively stable and slightly better yield than the industry average is a positive sign, especially given the rising stock price, closing at 287€ in 2023. Overall, the current yield slightly above the industry average can be considered a stabilizing sign after experiencing significant volatility.

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

Explain the criterion for Rheinmetall (RHM.DE) and why it is important to consider

The dividend growth rate criterion assesses whether the dividend given by Rheinmetall has grown at an average rate higher than 5% over the last 20 years. Dividend growth is a vital indicator of the company's ability to generate profit and reward shareholders over time. A rate above 5% generally suggests a strong and increasing return on investment, signaling a healthy, financially stable company that is managing its resources well.

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

Explain the criterion for Rheinmetall (RHM.DE) and why it is important to consider

The Payout Ratio signifies the proportion of earnings a company distributes to its shareholders in the form of dividends. Typically, an average Payout Ratio below 65% is considered healthy, indicating that the company is reinvesting enough of its earnings back into the business, maintaining growth potential while still rewarding shareholders.

Dividends Well Covered by Earnings?

Explain the criterion for Rheinmetall (RHM.DE) and why it is important to consider

A key criterion for evaluating a company's dividend sustainability is whether its earnings sufficiently cover the dividend payments. This is commonly assessed through the Payout Ratio, computed as Dividends per Share (DPS) divided by Earnings per Share (EPS). A lower payout ratio suggests that the company retains more earnings for growth and debt reduction, indicating better financial health and dividend sustainability.

Dividends Well Covered by Cash Flow?

This criterion evaluates the proportion of cash flow generated by the company that is used to pay dividends. A strong coverage ratio indicates that the company generates sufficient cash flow to cover dividend payments.

Rheinmetall's free cash flow and dividend payout amount over the years show a fluctuating trend in its ability to cover dividends. Positive values in the 'Dividend covered by Cashflow' column indicate sufficient coverage, while negative values indicate otherwise. Between 2003 and 2008, the coverage was strong in 2003 (0.24) but nonexistent in other years. Post-2009, the coverage ratio appears volatile, with a notable low in 2018 (-2.085) and high in 2013 (17.0 and this may reflect an anomaly or financial actions). The years 2019 and 2020 show a relatively healthy coverage (0.286 and 0.481), but concerning dips emerge in 2022 (-0.817) before rising again in 2023 (0.542). Overall, while there are instances of sufficient coverage, the trend demonstrates instability, which may raise flags for potential investors. Stability in the ability to cover dividends is crucial for reliable long-term investments, and Rheinmetall's volatility in this regard poses a risk, even though the most recent figures are encouraging.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years demonstrate a company's resilience and consistent income-generation ability.

Examining Rheinmetall's dividend payments over the past 20 years shows a varied trajectory. Notably, there were considerable drops during certain periods. For instance, between 2008 and 2009, the dividend decreased from 1.3 to 0.3, which indicates a significant reduction. Similarly, the dividend underwent considerable fluctuations in other years but never exhibited drops exceeding 20% consistently. The large increase seen in the recent years, reaching up to 4.8 in 2020 and slightly decreasing to 2 in 2021, and rebounding to 4.3 in 2022, followed by 10.00 in 2023.* Although the trend depicts volatility, it also illustrates the company's potential for significant recovery. Understanding this pattern is crucial for income-seeking investors, indicating that while there are periods of downturn, the overall trend remains upward, suggesting potential stability in the long term depending on economic and company-specific situations.

Dividends Paid for Over 25 Years?

Analysis of whether the company has consistently paid dividends for over 25 years.

Rheinmetall has paid dividends consistently over the last 24 years, from 2000 to 2023. This is just shy of the 25-year target but demonstrates a strong commitment to rewarding shareholders. The trend in dividends per share also shows growth with small interruptions, indicating resilience and a general upward trend. This consistency is a positive indicator for investors looking for reliable dividend income.

Reliable Stock Repurchases Over the Past 20 Years?

20-year stock repurchase trend and importance

Rheinmetall's stock repurchase behavior over the past 20 years shows stable and increasing number of shares, except for 2008, 2012, and 2013, with an average repurchase trend of approximately 6.0283% in the total share count. Reliable stock repurchase is interpreted as the company being proactive in managing its capital structure. Such trends can indicate a strategic allocation of surplus funds towards buybacks, enhancing shareholder value through higher earnings per share (EPS) and potentially influencing stock price positively. The consistency and frequency of buybacks are essential in reinforcing investor confidence and demonstrating a disciplined financial strategy.