Last update on 2024-06-27

SIGA Technologies (SIGA) - Dividend Analysis (Final Score: 5/8)

Dive into SIGA Technologies dividend analysis with a final score of 5/8. Evaluate dividend performance using an 8-criteria scoring system.

Short Analysis - Dividend Score: 5

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

The dividend analysis for SIGA Technologies (SIGA) was measured against an 8-criteria scoring system to determine the performance and stability of its dividend policy. With a dividend yield of 8.0357%, which is much higher than the industry average, SIGA shows promise for income-focused investors. Since 2022, SIGA began distributing dividends, with yields indicating potential undervaluation or a firm dividend policy, albeit caution is essential to ensure sustainability backed by earnings growth. The company hasn't exhibited any notable Dividend Growth Rate over the last 20 years, and the average annual payout ratio has remained at a conservative 6.86%. However, in recent times, earning coverages for dividends have shown improvement yet historical volatile earnings suggest caution. From a cash flow perspective, although there have been fluctuations, recent trends highlight improved sustainability in dividend coverage. SIGA has maintained its recent dividends without significant drops since 2022, but lacks a long-term dividends history, as dividends began only recently. Past 25 years' consistency in dividends is absent, indicating potential inconsistencies in earnings distribution policies historically. On the other hand, recent stock repurchase activities suggest a growing commitment to returning value to shareholders with noted increments from 2019 onwards, improving investor confidence fittingly.

Insights for Value Investors Seeking Stable Income

While SIGA Technologies has shown a commitment to distributing dividends recently with a high dividend yield and improved coverage ratios of late, several red flags include the lack of a long-term history in paying dividends and inconsistent past profitability. For income-focused investors, relying on a company with just a year or two of dividends might be risky. Further monitoring of the sustainability of these dividends and the company's financial health is advisable. Growth-oriented investors might find SIGA's reinvestment policies attractive, but a closer look into financial performance and future prospects is essential before considering a long-term investment. Therefore, keeping a close watch on this stock for further improvements and consistency would be prudent before making any major investment decisions.

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 is an important measure for income-focused investors, as it indicates the return on investment from dividends alone.

SIGA Technologies boasts a dividend yield of 8.0357%, substantially higher than the industry average of 0.08%. Analyzing historical trends from the last 20 years, SIGA did not pay dividends until 2022, when its yield surged to 6.1141%. This significant increase echoes a strong commitment to returning value to shareholders. Coupled with the closing stock price data, which has seen price fluctuations but stabilizes around mid-single digits recently, the high yield might suggest either an undervaluation of the stock or a strong dividend policy. However, caution is warranted: a sudden increase in dividend yield, especially if not backed by earnings growth, may not be sustainable. Therefore, while the current high yield is promising for income investors, ongoing dividend payout consistency and company earnings should be monitored to ensure this trend is sustainable and not a red flag.

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

The dividend growth rate assesses how much a company's dividend payments have increased over time. This is crucial for evaluating long-term returns and sustainability of the company’s dividend policy.

Based on the data, SIGA Technologies (SIGA) has maintained a Dividend Per Share Ratio of 0 from 2003 to 2023. This indicates that the company has not distributed any dividends in the past 20 years. Therefore, the Dividend Growth Rate can be deemed as non-existent or zero. This trend is not favorable for dividend-focused investors, as it shows that the company has either not generated sufficient profits to distribute dividends or it has decided to reinvest all profits back into the business for growth rather than returning capital to shareholders. While this might be acceptable for growth-oriented investors, those seeking regular income might look elsewhere. Further analysis would be needed to understand the company’s long-term strategies and financial health.

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

The average payout ratio measures the proportion of earnings paid out as dividends to shareholders. A ratio lower than 65% is generally considered healthy and sustainable for long-term growth.

The average payout ratio for SIGA Technologies (SIGA) over the last 20 years stands at approximately 6.86%, which is significantly lower than the 65% threshold. This suggests that the company has, on average, retained a large portion of its earnings or possibly not paid dividends at all for many years within this period. While the payout ratio spiked to about 96.80% in 2022, this appears to be an anomaly in an otherwise conservative dividend strategy. By maintaining such a low average payout ratio, SIGA Technologies indicates a strong potential for reinvesting earnings into growth opportunities or maintaining a financial buffer. Thus, this trend is good as it shows prudence in dividend distribution, contributing to long-term sustainability.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings means that a company generates enough profit to comfortably pay dividends to its shareholders. For SIGA Technologies, it's essential to ensure that their earnings are stable and sufficient to cover the dividend payouts, otherwise, they might have to cut dividends or finance them through debt.

Analyzing SIGA Technologies' earnings per share (EPS) versus dividends per share (DPS) from 2003 to 2023, it is evident that the company did not pay any dividends until 2022, despite fluctuating and often negative EPS values. Notably, from 2010 to 2018, SIGA's EPS was negative, suggesting profitability issues which persisted despite paying dividends starting in 2022. In 2022, the dividend per share was $0.45, covered by an EPS of $0.4649, resulting in a coverage ratio of 0.96795. For 2023, EPS improved to $0.9538 with the same $0.45 dividend, leading to a coverage ratio of 0.4718. The trend indicates a significant improvement in earnings coverage for dividends in these two years, yet historically low and irregular EPS suggests underlying instability. It's positive that the dividends in recent years were covered by earnings, but the overall trend could be concerning without consistent profit growth.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow refers to the idea that a company should generate enough free cash flow to cover its dividend payments. This is important as it indicates the sustainability of dividend payouts without compromising the company's financial health.

Analyzing SIGA Technologies' free cash flow and dividend payout amount over the years, we can see some challenges and improvements. For instance, between 2003 and 2017, the company did not pay any dividends but also experienced negative free cash flows in several years. In 2019, they started paying dividends amounting to approximately $32.94 million annually. In 2019, free cash flow was negative at about -$18.23 million, leading to a poorly covered dividend. Yet, in 2020, we notice a significant turnover where the free cash flow was $71.50 million, covering the dividend well (coverage ratio of 0.46). By 2021, the coverage ratio improved significantly to 2.88 with a free cash flow of $11.44 million. The latest data for 2023 shows that while the coverage ratio has decreased to 0.34, it is still positive with a free cash flow of $94.77 million. Overall, despite some fluctuations, the trend is moving positively towards better coverage of dividends by cash flow, indicating improved financial stability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments refers to the company's ability to consistently pay out dividends over a long period without significant drops. A drop of more than 20% in any single year can signal financial instability or fluctuating earnings, which can be a red flag for income-seeking investors who rely on these dividends for steady income.

In analyzing the data provided for SIGA Technologies (SIGA), it is evident that the company has only started paying dividends recently, beginning in 2022 with a dividend per share of $0.45. Since then, the dividend payments have remained constant at $0.45 per share into 2023. Unfortunately, prior to 2022, the company did not pay any dividends over the past two decades. The lack of historical dividend payments over the last 20 years makes it challenging to determine the stability of future payouts. While the recent initiation and maintenance of dividends are positive signs, the absence of a long-term track record suggests caution. For income-seeking investors, the lack of dividends prior to 2022 means there's limited evidence to gauge long-term dividend stability. Therefore, in conclusion, this trend shows an incomplete picture, leaning negative for now given the emphasis on historical stability required by this criterion.

Dividends Paid for Over 25 Years?

Dividends paid for over 25 years is critical as it indicates the company's long-term commitment to returning profits to shareholders, pointing to financial stability and consistent performance.

For SIGA Technologies (SIGA), the historical data shows that dividends were not paid for the majority of the 25-year period under consideration. Specifically, dividends per share remained at $0 from 1998 to 2020. It was only in the last two years, 2021 and 2022, that dividends of $0.45 per share were paid. While it is promising to see the initiation of dividend payments recently, the lack of a prolonged history of dividends over 25 years suggests that SIGA may not have been consistently generating excess profits or may have prioritized other financial strategies, such as reinvestment in growth or maintaining liquidity. This trend is more neutral to negative when strictly considering this criterion, as it does not demonstrate the type of long-term dividend stability that many conservative dividend investors seek.

Reliable Stock Repurchases Over the Past 20 Years?

Examine the company's track record of repurchasing shares over the past 20 years, highlighting any consistency or irregularities. This criterion helps in understanding the company's commitment to returning value to its shareholders while maintaining a strong capital structure.

Analyzing SIGA's share repurchase activity reveals some insightful trends. The data shows incremental repurchases in years 2012, 2019, 2020, 2021, 2022, and 2023. For instance, repurchases resulted in a reduction of outstanding shares from 54,061,650 in 2011 to 51,639,622 in 2012- an appreciable buyback. More significantly, there is noticeable steady repurchase activity from 2019 onwards; a reduction from 81,031,254 in 2019 to 71,362,209 in 2023 marks an average repurchase. Despite sporadic and non-consistent repurchasing behavior in initial years, the recent years exhibit a substantial commitment towards stock buybacks, averaging annual buybacks at approximately 8.7% which reflects positively on SIGA's capital return policy. This steady trend in recent years indicates a positive gesture, fostering shareholder confidence, and can be deemed favorable.