Last update on 2024-06-27

Sto SE (STO3.DE) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis for Sto SE (STO3.DE) with a final score of 5/8, evaluating performance and stability over 20 years.

Short Analysis - Dividend Score: 5

We're running Sto SE (STO3.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis of Sto SE (STO3.DE) evaluates how well the company handles its dividend payments using an 8-criteria scoring system, resulting in a score of 5 out of 8. 1. Dividend Yield Higher Than the Industry Average: A higher yield suggests better returns from dividends, but no specific comparison is provided. 2. Average Annual Growth Rate Higher Than 5%: Not met. Data shows inconsistency and volatility in dividend distribution. 3. Average Annual Payout Ratio Lower Than 65%: This shows a conservative policy, but with some uneven periods. 4. Dividends Well Covered by Earnings: Mixed coverage, with periods of disproportionate payments. 5. Dividends Well Covered by Cash Flow: Inconsistent coverage, indicating potential risk in sustainability. 6. Stable Dividends Since the Company Began Paying Dividends: Mostly stable with a huge spike in 2016, generally positive. 7. Dividends Paid for Over 25 Years: Close to the 25-year mark, showing strong commitment but with fluctuations. 8. Reliable Stock Repurchases: No buybacks, viewed as slightly negative.

Insights for Value Investors Seeking Stable Income

Sto SE (STO3.DE) presents a mixed but promising picture. While there are areas showing strong commitment to dividend payments, like stability and long-term payouts, inconsistency remains in dividend growth and coverage by earnings and cash flow. These inconsistencies pose potential risks for investors seeking reliable income from dividends. Given the company's decent history and partly positive trends, it may be worth a look but requires careful consideration and further research on its financial stability, market position, and future earnings potential.

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 Sto SE (STO3.DE) and why it is important to consider

Criterion 1 assesses the dividend yield, which is the ratio of the annual dividends to the stock price, representing the return on investment solely from dividends. A higher than industry average yield suggests that an investor gets a comparatively better return from dividends. This can be a crucial indicator of a company's ability to generate consistent income for its shareholders.

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

the Dividend Growth Rate is higher than 5% in the last 20 years

The given data shows a series of dividend per share ratio values across different years. The average dividend ratio is calculated at approximately 374.79%. However, the specific annual growth rate is not provided, so precise annual growth calculations cannot be made based on the provided data. Nonetheless, the presence of several negative values and zeros implies volatility in dividend distribution. It is crucial to consider consistent and stable growth rates when evaluating long-term investment potential. The stochastic nature of the current data indicates potential risk and unpredictability in future dividend growth, which can be detrimental for investors relying on stable income. Thus, based on the given numbers and their oscillations, the trend depicted here does not support a consistent 5% growth in dividends over the past 20 years. Therefore, this trend is bad for the given criteria.

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

Explaining why the criterion of having an average payout ratio lower than 65% over the last 20 years is important.

The provided payout ratio values and the calculated average suggest a very conservative approach in dividend policy over the two-decade period, with periods of very low or even zero payouts contrasted by some outliers.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings is critical because it ensures the sustainability of dividend payments without adversely affecting the company's financial health.

Analyzing Sto SE's data, we observe varied coverage of dividend payments by earnings. For instance, between 2008 and 2012, the ratio ranged between 0.017 to 0.023, signalling that dividends were a small fraction of earnings. However, in 2015, a spike to 1.74 occurred, showing dividends were largely covered by EPS, possibly due to a one-off high dividend payment. In recent years (2020-2022), the coverage ratio has marginally improved (0.18-0.20). Thus, the sporadic trends in coverage ratio suggest that while Sto SE generally maintains dividends within earning means, there have been periods of disproportionate payments. This snapshot indicates fairness but inconsistent commitment, suggesting potential risks when evaluating long-term dividend reliability.

Dividends Well Covered by Cash Flow?

Examining the ratio of dividends to free cash flow helps determine if a company can sustain its dividend payments without compromising its liquidity.

For Sto SE (STO3.DE), the trend of dividends covered by free cash flow fluctuated significantly over the years. In the earlier years, particularly between 2008 to 2012, coverage ratios were relatively modest to low (0.104 to 0.883). Notably, in 2015, the coverage peaked dramatically to 3.789, likely due to a one-time high free cash flow or reduced dividend payout. However, in 2018, the coverage fell to an uncomfortable low of 0.037, indicating potential vulnerability in dividend sustainability. More recently, from 2020 to 2022, the coverage ratios were around 0.192 to 0.666, suggesting some improvement and stability, but not optimal. Importantly, the spike in 2015 reveals that while Sto SE can occasionally generate enough cash flow to cover dividends generously, consistency remains a challenge. This fluctuating trend indicates that while Sto SE has managed to cover its dividends, the coverage is not always robust, implying a risk in dividend reliability. Sustaining dividends well relies on consistently high free cash flow, which Sto SE has not consistently demonstrated.

Stable Dividends Since the Company Began Paying Dividends?

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.

An analysis of Sto SE’s (STO3.DE) dividend distributions over the past 20 years reveals that the company’s dividend per share has mostly remained stable, except for significant increases, which do not negatively impact dividend stability. However, it's notable that in 2016, there was a special dividend payout of €25.14, causing a dramatic rise compared to both previous and subsequent years. From 2003 to 2015, the dividend per share remained at €0.31, and from 2016 onwards, the company's regular dividend level adjusted to approximately €4.69 per share. There were no cases where the regular dividend dropped by more than 20%, maintaining the consistency required by income-seeking investors. With a regular upward trend and consistent payouts since 2016, the trend can be seen as positive.

Dividends Paid for Over 25 Years?

Consistency in dividend payments over an extended period, typically spanning a minimum of 25 years, demonstrates a company's commitment to returning value to its shareholders and highlights its financial stability and profitability.

Examining the 22 years of dividend data provided for Sto SE (STO3.DE) reveals a steadfast commitment to shareholder returns, although the consistency is slightly marred with dividend fluctuations. Starting with a dividend of €0.79 in 2002, and seeing a notable drop to €0.42 in 2004, the company managed to stabilize dividends at €0.31 for an entire decade. The stark increase to €25.14 in 2015 appears to be an outlier, possibly due to extraordinary financial events. Following 2015, dividends settled within a range of €3 to €4.69, suggesting improvement in the firm's profitability and payout stability. Nevertheless, the dividends have been paid out consistently over the years, lacking just three years from the 25-year criterion. This trend is promising for long-term investors, reflecting positively on Sto SE's financial health and shareholder value commitment despite some fluctuations.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

The number of shares for Sto SE (STO3.DE) have remained consistently at 3,888,000 over the past 20 years with no stock repurchases recorded. This inactivity in stock buybacks can be interpreted in several ways. One positive aspect is that the company's capital structure has been stable, which may indicate consistent free cash flow and a lack of need for financial restructuring. On the downside, the absence of repurchases could suggest that the company hasn't taken advantage of periods when its stock may have been undervalued, missing opportunities to return value to shareholders through buybacks. Overall, the trend can be viewed as neutral, but it leans slightly negative given the market's preference for companies that actively manage their share count.