Last update on 2024-06-27

SUESS MicroTec (SMHN.DE) - Dividend Analysis (Final Score: 5/8)

SUESS MicroTec (SMHN.DE) dividend performance analyzed using an 8-criteria system; scored 5/8. Key insights on yield, growth, payout ratios, and stability.

Short Analysis - Dividend Score: 5

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

So, Suess MicroTec started paying dividends recently in 2022 after not doing so for nearly two decades. Their dividend yield is higher than the industry average which is a good sign for people who want income from their investments. But since the company has no long history of paying dividends and their payout ratio has been low over many years, it is unsure if they can keep this up. Plus, they haven't shown consistent dividend payouts or stock repurchases either, which is important for consistent income and sign of a company's financial health.

Insights for Value Investors Seeking Stable Income

Given that Suess MicroTec has just started paying dividends in 2022 and has no longstanding history of consistent payments, it might be a bit risky for investors looking for stable and reliable income. On the other hand, the current data shows an upward trend, but we need to monitor if this is sustainable. Existing income-focused investors may want to diversify their portfolio with more stable dividend-paying stocks while keeping a watch on Suess MicroTec's future performance.

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 represents the ratio between the annual dividend paid by a company and its share price. It is an important metric for investors looking for income, as it shows how much cash return they are getting for each dollar invested in the company's stock. A higher dividend yield may indicate a good investment opportunity as long as the dividend payout is sustainable.

SUESS MicroTec (SMHN.DE) has a dividend yield of 0.722%, which is significantly higher than the industry average of 0.34%. This is a positive indication for income-focused investors as they receive a higher return on investment compared to the industry benchmark. However, it is also important to note that this high dividend yield is relatively new for the company, as shown by its dividend yield history. Prior to 2022, the company did not pay dividends for nearly two decades. This sudden initiation of dividends could be seen as a positive development, but investors should investigate the sustainability of this dividend. Furthermore, the stock price fluctuations should be considered. With the stock trading at €27.7 in 2023, the dividend per share is €0.20, highlighting a payout ratio of about 0.722%, similar to the yield figure. This is comparatively good return given the price and the yield exceeding the industry average. Nevertheless, one must be cautious of potential risks due to the lack of a historical track record of dividend payments.

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

criterion

Dividend Ratio: {'year': {'values': ['2003', '.

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

Explain the criterion for SUESS MicroTec (SMHN.DE) and why it is important to consider

SUESS MicroTec's payout ratio has consistently been zero for the vast majority of the years between 2003 and 2023. Only in 2022 did it record a payout ratio of 12.4717%, with all other years at 0%. The average payout ratio over the last 20 years stands at approximately 0.59%. This trend implies that the company has retained its profits instead of distributing dividends to its shareholders. A low payout ratio can initially appear positive, indicating sufficient retained earnings for reinvestment in growth, expansion, or debt reduction. However, it can also signal a lack of commitment to rewarding shareholders with consistent dividends. Investors often look at payout ratios to gauge a company's dividend policy and its potential for future dividend growth. Given the industry norms and considering that even in profitable years the ratio has stayed at zero, this trend might be seen negatively by dividend-focused investors but could be a strategic move for reinvesting in the company's growth and stability.

Dividends Well Covered by Earnings?

Explain the criterion for SUESS MicroTec (SMHN.DE) and why it is important to consider

The criterion states that dividends are well covered by the earnings. The aim here is to ensure that the company’s dividend payments are adequately supported by its earnings per share (EPS). If the dividends are well covered, it means the company is generating sufficient profits to meet its dividend obligations without jeopardizing its reinvestment or operational needs. This is an important indicator of financial health and sustainability, reflecting the company’s ability to reward its shareholders while maintaining growth and stability.

Dividends Well Covered by Cash Flow?

Explain the criterion for SUESS MicroTec (SMHN.DE) and why it is important to consider

The criterion of dividends being well covered by cash flow is paramount in assessing a company's ability to sustain and potentially increase its dividend payouts. A healthy free cash flow (FCF) indicates that a company is generating enough cash after capital expenditures to not only cover its dividend payments but also reinvest in the business and meet other obligations. This aspect is critical for long-term investors focusing on dividend stability and growth.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments is a key criterion for income-seeking investors. It ensures that investors receive a consistent and reliable stream of income. In this case, it refers to SUESS MicroTec's ability to not decrease its dividends by more than 20% over the past two decades.

From the data provided, SUESS MicroTec has not paid any dividends from 2003 to 2021. They started paying dividends in 2022 with a dividend per share of 0.16 EUR and increased it to 0.20 EUR in 2023. There are no years where the dividend has dropped by 20% since they have only started paying dividends recently. However, the long history of no dividend payment suggests that SUESS MicroTec may not be the most reliable option for dividend-seeking investors at this point in time. Investors looking for stable dividends should consider companies that have demonstrated consistent dividend payments over a longer period.

Dividends Paid for Over 25 Years?

Examine whether SUESS MicroTec has a consistent history of paying dividends over a period extending beyond 25 years.

SUESS MicroTec does not qualify for this criterion as it hasn't demonstrated a history of paying dividends for over 25 years. Based on the provided data, the company started distributing dividends in 2022 with a dividend per share (DPS) of €0.16 and increased it marginally to €0.2 in 2023. This recent initiation of dividend payments indicates a positive direction in shareholder returns but falls short of the stability and reliability that come with a longer track record. Investors seeking consistent income from dividends would find SUESS MicroTec less appealing based purely on this criterion. However, the upward trend in DPS is a positive indicator and worth monitoring for future potential.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases over 20 years indicate a company's commitment to returning value to shareholders and can signal strong financial health.

Analyzing the number of shares for SUESS MicroTec (SMHN.DE) over the past 20 years reveals very limited buyback activity. The total number of shares has largely remained unchanged since 2006, except for 2008 when a minor repurchase occurred, reducing the number of shares by just 126. The average repurchase is negligible at 1.2875, indicating that buybacks have not been a priority for the company. In terms of reliability, the infrequent repurchases point to an inconsistent approach. This trend might signal to investors that shareholders' returns have not been significantly bolstered through share buybacks, which could impact the attractiveness of the stock from a dividend and shareholder return perspective.