Last update on 2024-06-27

SAF Holland (SFQ.DE) - Dividend Analysis (Final Score: 4/8)

Analysis of SAF Holland's (SFQ.DE) dividend policy; Final Score: 4/8 based on an 8-criteria system.

Short Analysis - Dividend Score: 4

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

The dividend analysis of SAF Holland (SFQ.DE) measures performance and stability against 8 criteria. SAF Holland excels in some areas: it offers a high dividend yield of 3.9474%, surpassing the industry average, and maintains an average annual payout ratio well below 65%, which is good for sustainability. Additionally, its dividends are largely covered by earnings and cash flow. However, it falls short in others: the average annual growth rate is below -5.99%, showing volatility; there are several instances of zero dividends from 2006 to 2013 and in 2016, reducing stability. It has not paid dividends consistently for 25 years and lacks regular stock repurchases.

Insights for Value Investors Seeking Stable Income

Investors looking for stable and consistent dividend payments might be cautious about SAF Holland due to its inconsistent dividend history and low average annual growth rate. However, those attracted to higher-than-average yields and disciplined payout ratios might find SAF Holland a good fit. Consider the trade-offs between yield and stability.)

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?

Explain the criterion for SAF Holland's dividend yield and why it is important to consider.

SAF Holland boasts a dividend yield of 3.9474%, significantly surpassing the industry average of 2.23%. This differential indicates a robust payout strategy and is attractive for income-focused investors. Historically, SAF Holland's dividend yield has shown variability, particularly between 2006 and 2013 where no dividends were reported. However, since 2014, the company demonstrates a commitment to rewarding shareholders, with peak yields in 2018 and 2019 reaching as high as 6.0811%. The current yield is underpinned by a dividend per share growth, reaching a high of 0.6 EUR in 2023. Notably, while the company's stock price reflects fluctuations, peaking in 2017 and facing declines in subsequent years, its ability to maintain a competitive yield is impressive. This trend, compared to industry averages which have remained relatively stable or low except for 2008 and 2016, positions SAF Holland as a potentially more lucrative dividend investment. Nevertheless, potential investors should weigh this against stock price volatility and policy changes seen in some years where no dividends were distributed.

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

The Dividend Growth Rate reflects the percentage increase in dividend payments made to shareholders over a specific period. It is important as it indicates a company's financial health and shareholder value.

For SAF Holland (SFQ.DE), analyzing the given Dividend Ratio data from 2006 to 2023, the average dividend ratio is -5.99%, which is significantly below the 5% mark required for a positive growth rate. This negative average reflects volatility in dividends and suggests an inconsistent payment practice. Notably, in 2015, the dividend ratio was 18.5185%, but it turned negative in 2016 and again in 2020. There were also multiple years with 0% ratio, indicating no dividends were paid. Consequently, the trend denotes poor performance in sustaining a consistent and growing dividend payout. This inconsistency is detrimental for investors seeking stable returns.

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

Average Payout Ratio in the last 20 years and why a lower payout ratio than 65% is important

The average payout ratio for SAF Holland (SFQ.DE) over the last 20 years stands at 25.63%, well below the 65% benchmark. A payout ratio below 65% typically indicates that the company is retaining enough earnings to reinvest in its operations, fuel growth, and ensure financial stability. Despite some years showing a payout ratio of 0 or considerably high, like 227.5025% in 2019, the overall trend stays significantly lower than 65%. This is a positive trend demonstrating the company’s disciplined approach to managing its profits and ensuring sustainable dividend payments. Such a consistent, low payout ratio reinforces the company's capability to withstand economic downturns and focus on continuous growth while rewarding shareholders.

Dividends Well Covered by Earnings?

SAF Holland's dividends are adequately covered by its earnings per share (EPS). The coverage ratio is indicative of a company's ability to sustainably pay its dividend from its earnings.

The data provided reveals contrasting trends in SFQ.DE's dividend coverage. After 2014, the company began paying dividends regularly, reaching a peak dividend payout of 0.6 EUR per share in 2023. However, from 2016 to 2023, the dividend coverage ratio fluctuated significantly. For instance, the highest coverage ratio was observed in 2019 (227.50%) indicating robust earning power relative to the dividend. But, the coverage ratio was relatively lower in years like 2018 (46.11%) and 2022 (26.01%). Such variability indicates that while the overall trend for covering dividends with earnings is generally positive, there are inconsistencies that shareholders should consider. A consistent EPS growth from 2019 (0.1978 EUR) to 2023 (1.7609 EUR)provides stability and a good indicator for future dividend sustainability, but the uneven coverage ratios suggest the need for cautious optimism going forward.

Dividends Well Covered by Cash Flow?

Explain the criterion for SAF Holland (SFQ.DE) and why it is important to consider

Free Cashflow: {'year': {'values': ['2006', '2007', '2008', '2009', '2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023']}, 'freeCashFlow': {'values': [12678000, -1711000, 11166000, 39440000, 31743000, 27067000, 31684000, 30746000, 11305000, 35023000, 67662000, 29625000, -6000, 37565000, 113459000, 14997000, 117140000, 141042000]}} Dividend Payoutamount: {'year': {'values': ['2006', '2007', '2008', '2009', '2010', '2011', '2012', '2013', '2014', '2015', '2016', '2017', '2018', '2019', '2020', '2021', '2022', '2023']}, 'dividendPayoutAmount': {'values': [0, 0, 8000000, 0, 0, 0, 0, 12248000, 12248000, 14516000, 18144000, 19959000, 20427000, 20427000, 15888000, 15888000, 15888000, 27237000]}} Dividend covered by Cashflow: [0.0, -0.0, 0.7164606842199535, 0.0, 0.0, 0.0, 0.0, 0.3983607623755936, 1.0834144183989385, 0.41447049082031806, 0.2681564245810056, 0.6737215189873418, -3404.5, 0.5437774524158125, 0.14003296344935176, 1.0594118823764753, 0.13563257640430254, 0.1931126898370698]

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years. Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

The recorded data for SAF Holland show several instances of zero dividends. Specifically, from 2006 to 2013, there were no payments, and in 2016, 2020, and 2021 the dividends also dropped to 0. Comparing the dividend values from non-zero years does show some fluctuations e.g., dividends paid in 2014 (0.27) increased to 0.32 in 2015, followed by a drop to 0 in 2016. In recent years, 2022 shows a spike with dividends of 0.35 increasing to 0.6 in 2023. These cuts or non-existing dividends indicate a lack of stability, which is not favorable for income-seeking investors. Therefore, the trend is bad.

Dividends Paid for Over 25 Years?

Whether a company has paid dividends consistently over a long period is a crucial measure of its stability and shareholder-friendly policies. A track record of over 25 years is often viewed favorably by conservative investors who seek dependable income streams.

Analyzing SAF Holland (SFQ.DE)'s dividend payment history from the available data (2006-2023) reveals an inconsistent trend. Dividends were paid in some years (notably 2014, 2015, 2017, 2018, 2019, 2022, and 2023), with significant gaps in other years. There was no payment from 2006 to 2013, another absence in 2016, and during 2020 and 2021. This inconsistent dividend history is concerning, particularly for long-term investors who value regular dividend income. Thus, SAF Holland does not meet the criterion of paying dividends for over 25 continuous years, indicating a less stable dividend policy and potentially higher risk for dividend-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Stock repurchases, or share buybacks, indicate a company thinks its stock is undervalued and is investing in itself. Reliable repurchases are a sign of robust financial health and discipline.

Over the past 20 years, SAF Holland has engaged in stock repurchases in three notable years: 2008, 2018, and 2019. This translates to an average frequency of approximately 3.36% per year, which indicates occasional but not regular repurchase activity. The repurchase in 2008 coincides with the global financial crisis, suggesting a strategic move to capitalize on lower stock prices. The buybacks in 2018 and 2019 likely reflect a strong confidence in the company's performance during that period. However, the relatively low frequency of buybacks underscores a conservative approach to capital management and a focus on other strategies for shareholder value creation. This trend could be both positive and negative; while conserving resources is prudent, it may also suggest fewer opportunities for repurchases due to capital constraints or other priorities.