Last update on 2024-06-27

SCOR (SDRC.DE) - Dividend Analysis (Final Score: 4/8)

Dividend analysis of SCOR (SDRC.DE) with an 8-criteria scoring system to assess performance and stability. Final score: 4/8. Discover insights and details.

Short Analysis - Dividend Score: 4

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

SCOR (SDRC.DE) scored 4 out of 8 on a dividend analysis, raising some concerns about their dividend policy. These areas analyzed how well SCOR's dividends perform and how stable they are. Their current 5.283% dividend yield seems attractive compared to the industry average of 3.11%, but this high yield fluctuates a lot, which might indicate risky sustainability. Their dividend growth rate over the past 20 years is very unstable with multiple years of no dividends and significant drops, making it less reliable. With an average payout ratio of 156.95%, way above the sustainable line of 65%, this suggests SCOR might be overextending its earnings in paying dividends. Over the years, SCOR has not always had its dividends well-covered by earnings, especially in recent years where they faced significant drops. Dividend coverage by cash flow shows variability too, suggesting financial inconsistency. SCOR's history shows significant drops in dividends, further depicting lack of stability. They've paid dividends consistently for 25 years, but that alone doesn’t outweigh the above inconsistencies. On stock repurchases, they've been actively buying back shares, which is a good sign of returning value to shareholders.

Insights for Value Investors Seeking Stable Income

Based on the analyses, SCOR (SDRC.DE) shows high yields and active capital return strategies like stock repurchases. However, the fluctuating dividends, high payout ratios, and inconsistent coverage portray it as an unstable choice for dividend-focused investors. It might be more interesting for investors looking for short-term gains or those who can tolerate some risk. If stable and reliable dividends are important to you, this might not be the best stock to look into.

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. A higher dividend yield might indicate a good earning for investors.

SCOR's current dividend yield of 5.283% is significantly higher than the industry average of 3.11%, which initially appears to be a favorable indicator. Historically, SCOR's dividend yield shows a volatile pattern with the highest being 16.5441% in 2022 and recent stable significant payout. In absolute figures, SCOR’s dividend per share increased sharply only in recent years, reaching €1.4 in 2023. However, the dividend yield’s high fluctuation suggests inconsistency which raises questions about its sustainability. A higher yield can often mean that the stock price has plummeted or the company’s earnings are faltering, attracting investor caution. In this context, while the high yield appears attractive, examining the underlying financial stability of SCOR is crucial to discern risks.

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

Dividend Growth Rate measures the annualized percentage rate of growth that a stock's dividend undergoes over a period of time. Analysts look for stocks where the dividend growth rate is higher than 5%, as it indicates a robust dividend policy, benefiting long-term shareholders.

Looking at the Dividend Ratio from 2003 to 2023, SCOR (SDRC.DE) shows significant fluctuations. There are years with no dividends and even negative changes, such as -100% in 2017 and -61.1111% in 2023. 2021 was an outlier with an extremely high ratio of 1590.4246%. These inconsistencies suggest a highly unstable dividend policy. Despite the large positive value in 2021, the volatility renders the overall trend not favorable. Hence, SCOR does not meet the criterion of having a stable dividend growth rate above 5% over the last 20 years.

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

The average payout ratio represents the proportion of earnings a company pays to shareholders in the form of dividends. An average payout ratio under 65% is considered sustainable.

The calculated Average Payout Ratio of SCOR (SDRC.DE) over the last 20 years is approximately 156.95%. This figure significantly exceeds the recommended maximum of 65%. High payout ratios can indicate financial instability as they suggest the company is paying out a large portion of its earnings, which might impinge on future growth and reinvestment opportunities. The spike of payout ratios over 400% might suggest periods of either extremely poor earnings relative to dividends or extraordinary dividend payments. A lower and stable payout ratio within the ideal range reflects a company's ability to sustain its dividend payouts.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings refers to the company's ability to sustain its dividend payouts from its current earnings. It is important for the long-term financial health of a company and its attractiveness to dividend-focused investors.

Based on the given data for SCOR (SDRC.DE), the situation varies over the years. Observing the ratio of earnings per share (EPS) to dividends per share (DPS), in years like 2010, 2011, and 2012, the ratios were 4.145, 6.229, and 4.919 respectively, indicating strong coverage. However, in more recent years such as 2021 and 2023, the coverage dropped significantly to 0.0865 in 2021 and 0.309 in 2023, making it quite unsustainable. Notably, in 2022, the EPS was negative (-7.7579), reflecting a large loss while still maintaining a DPS of 3.6, leading to a negative ratio (-0.464). Such trends can be alarming for dividend stability and suggest that the dividends are either paid out of reserves or through increased debt, which is concerning.

Dividends Well Covered by Cash Flow?

How dividends are well covered by cash flow indicates the financial ability of a company to sustain its dividend payout. If dividends consume too much of the free cash flow, the company may struggle to maintain these payouts during downturns. It’s important to investors looking for stable or growing dividend payments.

Looking at SCOR's data from 2003 to 2023, dividend coverage by free cash flow has been erratic. Notably, in 2003-2005, the ratio was negative, indicating free cash flow was not sufficient to cover dividends. Throughout the years, the ratio generally stayed above 0.1, with better coverage seen in years like 2018 (0.388) and 2022 (0.751). However, dips like 2021 (0.144) highlight periods of financial strain. This inconsistent trend implies moderate risk for dividend investors and suggests SCOR should aim for more stable and higher coverage ratios to reassure long-term investors.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are crucial as they offer a reliable income stream to shareholders, reflecting the firm's consistent financial performance and disciplined capital allocation. Investigating dividend drops exceeding 20% over a prolonged period like 20 years helps in assessing the long-term reliability of dividend payouts.

Analyzing SCOR's dividend history from 2003 to 2023, it's evident that the company had sporadic dividend payments with significant drops in certain years. Notably, SCOR paid no dividends before 2010 and for several years afterward (2015-2019). There is a dramatic drop of more than 20% observed in the years when dividends were reinstated. For example, after several non-paying years, the dividend in 2020 was EUR 0.213 compared to the previous payout of EUR 1.5 in 2014. Additionally, in 2023, the dividend dropped from a notable EUR 3.6 the previous year to EUR 1.4. These fluctuations indicate instability, making SCOR less attractive for income-focused investors who seek consistent dividend payouts. Overall, this trend is deemed unfavorable for this criterion as stability in dividends has not been maintained.

Dividends Paid for Over 25 Years?

Explain the criterion for SCOR (SDRC.DE) and why it is important to consider

Dividends paid consistently for over 25 years is a significant indicator of a company’s stability and dedication to returning value to shareholders. Companies that can maintain such a record are often seen as low-risk investments.

Reliable Stock Repurchases Over the Past 20 Years?

reliable stock repurchases

The company's number of shares outstanding has fluctuated significantly over the last two decades. Looking at the reliable repurchased years, they have periodically repurchased shares during 2009, 2016, 2018, 2019, 2021, and 2022. This indicates an active effort to return capital to shareholders. The average repurchase rate of 26.1262 also shows that SCOR (SDRC.DE) has made consistent efforts in managing its capital structure.