Last update on 2024-06-27

Stabilus (STM.DE) - Dividend Analysis (Final Score: 5/8)

Dive into Stabilus (STM.DE) dividend analysis and see the performance scored at 5/8. Discover the insight on its policies and historical trends.

Short Analysis - Dividend Score: 5

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

Stabilus (STM.DE) yields a dividend score of 5 based on an 8-criteria system evaluating dividends over the last 20 years. 1. **Dividend Yield**: At 2.8363% in 2023, it's significantly higher than the industry average (1.57%). 2. **Dividend Growth Rate**: With fluctuating dividends, it shows an average growth rate but not consistently over 5% annually. 3. **Payout Ratio**: At about 20.73%, it is well below the 65% threshold, indicating a conservative approach. 4. **Coverage by Earnings**: It ensures dividends are within earnings, avoiding financial stress. 5. **Coverage by Cash Flow**: This is crucial but specific data is missing in the given text. 6. **Dividend Stability**: Payments have been stable since 2017, with occasional slight dips. 7. **Dividend Payment Duration**: Has been regular since 2017 but does not fulfill the 25-year consistency criterion. 8. **Stock Repurchases**: Limited activity noted, primarily in 2014, suggesting limited repurchase reliability.

Insights for Value Investors Seeking Stable Income

Stabilus (STM.DE) shows positive signs like better-than-average yield, conservative payout ratios, and stable dividends since 2017, which can attract investors seeking income stability. However, its history of fluctuating dividends, limited stock repurchases, and not meeting the 25-year payment duration may deter long-term reliability seekers. Potential investors may want to consider these factors and keep an eye on its future dividend continuity and financial health before committing.

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 quantifies the annual dividend income an investor receives, relative to the stock price. Higher yields imply better income for investors, which is attractive especially when compared to industry averages. This metric reflects both the company's dividend policies and market perceptions regarding its financial health.

Over the last 20 years, Stabilus's dividend yield has evolved dramatically from zero in 2012 to an impressive 2.8363% in 2023, significantly outperforming the industry average of 1.57% for the same year. This escalation is a positive indicator for potential and current investors, suggesting that Stabilus is committed to returning value to shareholders through increasing dividends. Additionally, despite the fluctuations in stock prices, the upward trend in dividend yield portrays a company that might have a strengthened financial position or efficient operational strategies to support higher dividend payouts. Thus, this trend is favorable.

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

What is the Dividend Growth Rate and how does it affect the analysis of a company like Stabilus (STM.DE)?

The Dividend Growth Rate measures how much a company's dividend payments have increased over time, indicating the company's ability to generate earnings and return value to shareholders. This growth rate is crucial for investors seeking long-term income and capital appreciation. Given Stabilus' historical dividend per share values from 2012 to 2023, the average dividend per share ratio is roughly 14.3%. The dividend per share fluctuates significantly with few years showing no dividend and an unusual negative value in 2021, resulting in an unconventional calculation scenario. The substantial growth even with irregularities could suggest the company's efforts towards dividend resilience amidst volatile economic conditions. Nevertheless, the dividends don’t show consistent year-by-year growth to meet the classical definition of an ideal dividend growth stock. Hence, regarding expected steady yearly growth above 5%, it seems inadequately met.

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

The average payout ratio is a metric that measures the proportion of earnings a company pays to its shareholders in the form of dividends. An average payout ratio below 65% is considered sustainable, as it implies the company retains enough earnings to reinvest in growth or cover unforeseen expenses.

Upon reviewing Stabilus' payout ratios over the past 12 years, the average payout ratio stands at approximately 20.73%, well below the 65% threshold. This indicates a conservative dividend policy, suggesting that Stabilus prioritizes retaining earnings for reinvestments and securing its financial stability. While the consistent low payout ratios up to 2018 and the spike to 86.44% in 2020 could indicate an unusual or exceptional event for that year, the return to lower ratios in 2021 and 2022 signals prudent financial management overall. This conservative payout strategy is favorable for long-term stability and growth.

Dividends Well Covered by Earnings?

criterion for dividends being covered by earnings and its importance

Dividends being well covered by earnings per share (EPS) ensures the sustainability of dividend payments without jeopardizing the company's financial health. If a company's dividends are consistently higher than its earnings, it might indicate that the company is paying out more than it can afford, which could lead to future dividend cuts or financial distress.

Dividends Well Covered by Cash Flow?

Explain the criterion for Stabilus (STM.DE) and why it is important to consider

Dividends covered by cash flow is a measure of a company's ability to pay dividends to its shareholders using the free cash flow it generates. It is calculated by dividing the dividend payout amount by the free cash flow. A higher value indicates that a larger portion of the cash flow is being used to pay dividends, suggesting less of a buffer for other expenditures or investments. The dividend coverage ratio provides insights into the sustainability of dividend payments.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends indicate a company's reliable earnings and sound financial standing both are crucial for income-focused investors.

Stabilus (STM.DE) has not been paying dividends for the full 20-year period as their payments commenced in 2017. Since then, the company has shown general growth in dividend payments year over year. For instance, starting from 0.5 in 2017, it increased to 1.75 by 2023. However, in 2021, we observe a slight decrease with a dividend per share of 0.7385 from 1.1 in 2020, which constitutes a decrease but not by more than 20%, thus not triggering a significant viability concern. This trend of steady but occasionally fluctuating dividends implies the company is generally stable but warrants close monitoring to ensure dividend reliability aligns with income-based investment strategies.

Dividends Paid for Over 25 Years?

This criterion evaluates whether a company has a long history of consistently paying dividends, which is often seen as a sign of a financially stable and shareholder-friendly company.

Based on the given data, Stabilus (STM.DE) has been paying dividends consistently only since 2017. The dividend payments started at 0.5 EUR per share in 2017 and have increased to 1.75 EUR per share in 2023. While this demonstrates a strong commitment to returning value to shareholders in recent years, the company fails to meet the criterion of paying dividends for over 25 years. Nonetheless, the upward trend in dividend payments can be seen as a positive sign, though it does not fulfill the 25-year requirement.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company's commitment to returning value to shareholders and its confidence in its financial stability. This can positively impact the stock price and investor sentiment.

In examining Stabilus' stock repurchasing trend over the past 20 years, it is evident that significant repurchase activity was only recorded in the year 2014, when the number of shares dropped from around 20.7 million to 18.7 million. This gives an average repurchase of approximately 1.7774 years of the last 20 viewed. This limited share repurchase activity over two decades suggests that Stabilus has not been particularly aggressive or consistent in its efforts to buy back shares. While this may indicate a conservative approach to managing its cash reserves, it might also reflect a missed opportunity to use share repurchases as a tool for enhancing shareholder value. Therefore, in terms of reliable stock repurchases, Stabilus might not be considered particularly strong, a trend that could be viewed as less favorable for long-term investors seeking returns through both dividends and buybacks.