Last update on 2024-06-27

Stratec (SBS.DE) - Dividend Analysis (Final Score: 5/8)

In-depth assessment of Stratec's (SBS.DE) dividend policy. Discover its dividend yield, growth, payout ratio, and stability.

Short Analysis - Dividend Score: 5

We're running Stratec (SBS.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 a key metric for investors as it shows how much a company pays out in dividends each year relative to its stock price. A higher dividend yield can indicate a good investment opportunity for income-focused investors. Comparing the yield to the industry average helps investors gauge the company's performance relative to its peers.

Stratec's dividend yield of 2.1295% is significantly higher than the industry average of 0.29%. Analyzing the last 20 years, Stratec's dividend yield has mostly been above 1%, reaching as high as 3.1809% in 2018. This consistently high dividend yield compared to the low industry average suggests that Stratec has been a reliable dividend payer, which is especially attractive for dividend-seeking investors. The trend indicates steady growth, albeit with slight fluctuations, and showcases the company's commitment to returning value to its shareholders.

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

Explain the criterion for Stratec (SBS.DE) and why it is important to consider

The Dividend Growth Rate metric assesses the compound annual growth rate (CAGR) of a company’s dividend payments over a specified timeframe. This is important because a consistent and high Dividend Growth Rate indicates a company's ability to generate increasing cash flows and a commitment to returning value to shareholders.

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

The average payout ratio reflects the percentage of earnings a company distributes as dividends. A ratio under 65% suggests sustainable dividend payments.

Over the last 20 years, Stratec (SBS.DE) has had an average payout ratio of approximately 39.84%, which is well below the 65% threshold. This trend is good as it indicates that Stratec maintains a conservative approach to dividend payouts. The highest value during this period was 214.68 in 2019, a year marked by extraordinary circumstances. Ignoring this outlier, the company has consistently kept its payout ratio at a sustainable level, which is a positive indicator for investors seeking reliable dividend streams.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings highlights whether a company's profitability can sustain the dividend payout. A well-covered dividend indicates healthy financials and lower risk for dividend cuts.

Stratec's ratio of dividends covered by earnings has shown some inconsistency over the years. For example, in 2017, the ratio was 35.99%, indicating that the earnings comfortably covered the dividends. However, in years like 2016 and 2023, there were significant spikes. In 2016, the ratio jumped to 214.68%, which suggests an unusually high earning compared to the dividends paid out. In contrast, in 2023, the ratio dropped to 0%, indicating potential financial difficulty or a strategic shift leading to losses or near-zero profits. Most periods show a decent coverage ratio above 25%. High variation but generally good earnings coverage suggests good management but also fluctuating profitability.

Dividends Well Covered by Cash Flow?

Explanation of dividends well covered by cash flow and why it is important to consider.

For Stratec (SBS.DE), it's crucial to analyze whether the dividends are well covered by the free cash flow. This metric indicates whether the company generates adequate cash to cover its dividend payouts, an essential factor for dividend sustainability. Stratec's cash flow coverage ratios over the years reflect both positive and negative trends. Specifically: - Negative ratios in years like 2003 (-0.0), 2005 (-0.645), 2010 (-0.833), 2018 (-1.273), 2019 (-1.757), and 2022 (-1.318) indicate that in those years, dividends weren't covered by the company's cash flow. This is a risk for investors relying on dividends for income as it suggests the company might dip into reserves to maintain dividend payments. - Conversely, positive ratios like in 2016 (1.415), 2020 (1.611), and others suggest the company had surplus cash flow to easily cover dividends, which is a promising sign. However, the inconsistency is concerning. The trend of fluctuating and sometimes negative ratios indicates unpredictability in dividend sustainability. An unstable dividend coverage can be worrying for investors who depend on consistent dividend income.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over a long period indicate reliability and are often sought after by income-seeking investors. These investors prefer companies with consistent dividend payments since it suggests stability in earnings and responsible management of capital.

Over the past 20 years, Stratec (SBS.DE) has maintained a relatively stable dividend policy. The dividend per share has generally increased over time, despite some fluctuations. A notable drop of slightly more than 50% occurred from 2006 to 2007, decreasing from 0.3 to 0.15. However, post-2007, there have been no other significant drops exceeding 20%. The firm recovered strongly, and from 2018 onwards, the dividends have shown consistency with incremental increases each year, culminating at 0.97 in 2023. This stable trend, barring the early setback, is mostly positive, reflecting resilience and commitment to returning value to shareholders.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years evaluates the track record of a company in consistently returning profits to shareholders, indicating long-term financial health and commitment to shareholder returns.

Stratec (SBS.DE) has been paying dividends continuously since 2004. Over the course of these 19 years, the company’s dividend per share has shown a general upward trajectory, despite some fluctuations. Starting from €0.08 in 2004, it has grown to €0.97 per share in 2023. Although this period is slightly short of the full 25-year criterion, the consistent and increasing dividends over nearly two decades are indicative of the company’s stable financial performance and its ongoing commitment to rewarding shareholders. This trend can be considered as a positive signal for investors who prioritize dividend income, though it's important for the company to maintain and extend this track record to meet the full 25-year mark for even stronger investor confidence.

Reliable Stock Repurchases Over the Past 20 Years?

Assessing whether a company has engaged in reliable stock repurchases over the past two decades is critical for understanding the strategies deployed for shareholder value enhancement. Consistent repurchasing indicates a company's confidence in its financial health and future prospects.

An analysis of Stratec shows that it has repurchased shares in the years 2008, 2009, and 2019. However, given that there have been only three reliable years of repurchasing over a span of 20 years, it does not meet the criterion of reliability. The average repurchase rate over the two decades stands at around 1.0637, which suggests sporadic activity rather than a consistent trend. Despite this, the years they chose to buy back shares may indicate strategic financial planning during specific periods, potentially during undervaluation phases or periods of excess cash flow. Consequently, the overall trend of stock repurchases at Stratec cannot be characterized as reliably strong.