Last update on 2024-06-27

Sixt (SIX2.DE) - Dividend Analysis (Final Score: 4/8)

Sixt (SIX2.DE) dividend analysis shows a final score of 4/8 using 8 criteria. We evaluate performance and stability in this detailed analysis. Read more!

Short Analysis - Dividend Score: 4

We're running Sixt (SIX2.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis of Sixt (SIX2.DE) is based on eight criteria evaluating the performance and stability of its dividend policy. Sixt scores 4 out of 8 in these criteria. The dividend yield currently stands at 1.9763%, below the industry average of 2.55%. Though it's a recovery from a recent period of no dividends, it's still not ideal for income-focused investors. The average dividend growth rate is 29.5% over 20 years, but this comes with high volatility, meaning significant year-to-year changes. The payout ratio is on average 44.94%, indicating a generally responsible policy save for a few outlier years. Dividends are usually well-covered by earnings and cash flow, but some years show discrepancies. The company has paid dividends consistently from 2001 to 2023 except during the COVID-19 period, affecting stability. Stock repurchase information was not directly provided. The overall trend shows a mix of strong growth and historical stability, moderated by occasional volatility and gaps.

Insights for Value Investors Seeking Stable Income

Sixt (SIX2.DE) shows some strong points such as a decent average payout ratio and impressive average dividend growth rate. However, significant fluctuations in year-to-year dividend growth and periods of 0% dividends, particularly during crises, might concern investors seeking stability and predictable income. If you're comfortable with some inconsistency and looking for potential high growth, Sixt could be worth considering. For those who prioritize stable and reliable dividends, it might not be the best choice right now. Further examination into management’s future dividend policy and financial stability is recommended.

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 provides investors with a measure of the income they can expect relative to the price of the stock, making it an important metric for income-focused investors.

Sixt (SIX2.DE) has a current dividend yield of 1.9763%, which is lower than the industry average of 2.55%. Considering its historical performance over the last 20 years, Sixt's dividend yield fluctuated significantly. For instance, it peaked at 20.3448% in 2008 and dropped to 0% during the 2020 and 2021 periods. The most recent yield of 1.9763% is a positive move compared to the 0% in 2020 and 2021 but remains below the industry average. This trend could indicate that while Sixt is recovering from a period of lower dividends, it still has a way to go to match industry standards. Therefore, the current trend is moderately positive but not yet at an ideal level for dividend-focused investors.

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

Evaluation of the Dividend Growth Rate over multiple years involves looking at the year-over-year growth percentage in dividends paid per share. Ideally, it's desired to have a stable and increasing growth rate over the long term as it indicates the financial health and profitability of the company over time. This is crucial for investors who rely on dividend income for their returns.

The given dataset displays year-on-year dividend per share ratio fluctuations for Sixt over 20 years. Although the average Dividend Growth Rate approximates 29.5%, individual yearly changes vary significantly, ranging from -100% to 600%. Notable highs include a 275% increase in 2016 and a 600% surge in 2011, while lows include a -100% drop in 2020. This volatility indicates inconsistencies, raising concerns about reliability. However, the high average suggests strong overall growth, which is positive provided the investor is comfortable with the inconsistencies. The trend is mixed: impressive growth averages, but high variability lowering predictability.

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

The average payout ratio indicates what portion of earnings a company pays to its shareholders in dividends. A ratio lower than 65% typically suggests that the company has ample room to reinvest in its business while still rewarding shareholders.

The payout ratio data for Sixt (SIX2.DE) spans from 2003 to 2023, with values fluctuating significantly across the years. Notably, the years 2008 and 2009 show markedly high payout ratios of 97.2875% and 391.198%, respectively, which can raise concerns about dividend sustainability. However, except for these outliers, most values are well below the 65% threshold, and the average payout ratio over this period is approximately 44.94%. This trend is generally positive, indicating that Sixt usually retains a substantial portion of its earnings for reinvestment while consistently distributing dividends. In summary, the company maintains a responsible dividend policy, though sporadic spikes should be scrutinized further to understand underlying causes.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

Evaluating whether Sixt's dividends are well covered by earnings involves comparing the Earning per Share (EPS) against the Dividend per Share (DPS). EPS reflects a company's profitability, while DPS indicates what portion of profit is distributed as dividends. For Sixt, the figures historically show some variations in coverage. Notably, in 2008 EPS was 1.2129 and DPS was 1.18, resulting in a coverage ratio of around 0.973, which indicates that dividends and earnings were closely matched. However, in 2009 the EPS plummeted to 0.2045 while DPS was 0.8, resulting in a coverage ratio of approximately 3.912. Such disparities suggest times when the dividend payouts were not sustainably aligned with earnings. Again, for 2020 and 2021, EPS were -0.9853 and 10.3121 respectively, and DPS were 0, signifying years of minimal or no dividend payout despite fluctuating earnings. Moreover, in 2022, the coverage ratio excels to 0.874, in spite of a prior significant payout rate in 2021, indicating management's aggressiveness towards financial stability. Thus, despite some fluctuating trends, Sixt generally portrays a strong alignment between earnings and dividends, crucial for investors seeking predictability and healthy returns.

Dividends Well Covered by Cash Flow?

Criterion 3: Dividends Well Covered by Cash Flow. Why is it important to consider this for Sixt (SIX2.DE)?

Dividends well-covered by cash flow mean that a company generates sufficient cash to sustain its dividend payouts without resorting to debt or external financing. For Sixt (SIX2.DE), this metric is significant as it indicates the company's ability to return value to shareholders while maintaining financial stability.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over the past 20 years are indicative of a company's consistent financial health and reliability, which is crucial for income-seeking investors. It assures them of the company's ability to generate and distribute profits continuously.

Analyzing Sixt's dividend per share for the last 20 years, there were some fluctuations and even years with no dividend payments, notably in 2020 and 2021, where the dividend dropped to 0. Before these drops, the year 2010 saw a reduction of 75% as compared to the previous year, and 2009 witnessed a drop of over 85%. More recently, in comparison to 2022, dividends dropped drastically in 2023. While there was a massive one-off payout in the year 2021 (EUR 11.1 per share), such fluctuations, especially dropping by more than 20% several times, break the stability criterion, making it challenging for investors who prioritize steady income.

Dividends Paid for Over 25 Years?

A company that has consistently paid dividends for over 25 years indicates long-term stability and a commitment to returning value to shareholders.

The data shows that Sixt has paid dividends consistently from 2001 to 2023, with the exceptions of 2020 and 2021 due to the COVID-19 pandemic. Over these years, the dividends per share have varied, starting at 0.8 in 2001 and most recently being 2 in 2023. Particularly notable is the sharp increase to 11.1 in 2022, likely reflecting a one-time special dividend, illustrating Sixt's flexibility in profit distribution. Despite the two-year interruption, this suggests a resilient dividend policy and a longer-term commitment to shareholders. Overall, the trend is quite positive, especially considering recent robust payouts.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Sixt (SIX2.DE) and why it is important to consider

Stock repurchases are a way for a company to return excess cash to shareholders and can be a sign of management's confidence in the company's future prospects. Reliable stock repurchases over an extended period, like 20 years, indicate a strong and consistent capital return policy, which can be attractive to long-term investors.