Last update on 2024-06-27

Symrise (SY1.DE) - Dividend Analysis (Final Score: 4/8)

Comprehensive analysis of Symrise (SY1.DE) dividend performance and stability with an 8-criteria scoring system. Final Score: 4/8.

Short Analysis - Dividend Score: 4

We're running Symrise (SY1.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis for Symrise (SY1.DE) reviews eight key factors to measure the performance and stability of the company’s dividend policy. Symrise scored 4 out of 8 based on these criteria. First, the company’s dividend yield, currently at 1.05%, is much lower than the industry average of 2.37%. This might not be appealing to income-focused investors. The dividend growth rate averaged around 6.95% over 20 years, but this rate has shown significant volatility. The payout ratio averaged around 41.3%, which is below the safe threshold of 65%, indicating sustainability, but there were years like 2020 with higher ratios. While the earnings coverage for dividends has generally been resilient, there have been inconsistencies. Also, cash flow coverage has been unstable, with noticeable fluctuations that might concern investors. Although dividend payments have shown stability since 2008, Symrise does not meet the criterion of paying dividends for 25 years. Finally, the reliability of stock repurchases over the past 20 years is not mentioned in the analysis.

Insights for Value Investors Seeking Stable Income

Symrise shows a mix of strengths and weaknesses in its dividend policy. The low average payout ratio and stable earnings coverage are positives, suggesting that the company is mindful of sustaining dividends. However, the low dividend yield compared to the industry and the volatile dividend growth rate are points of concern. Additionally, the company’s short history of dividend payments (only since 2008) and inconsistencies in cash flow coverage may pose risks for conservative investors. If you are a growth-oriented investor who values long-term potential over immediate returns, Symrise might be a stock to consider, given its reinvestment tendencies. However, if stable and predictable dividends are your priority, you might want to look at other options with a more consistent and long-standing dividend history.

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 and its relevance for evaluating a company's financial health and investor appeal

Symrise’s current dividend yield stands at 1.0538%, positioning it significantly below the industry average of 2.37%. While dividend yield is a commonly used metric to gauge the attractiveness of a company’s dividend payments in relation to its stock price, this lower yield in comparison to the industry may not resonate well with income-oriented investors. Over the last two decades, Symrise's dividend yield has seen remarkable fluctuations, peaking at 5.01% in 2008 and reaching its lowest point at 0.7444% in 2021. Analyzing the trend reveals that Symrise has generally offered lower dividend yields compared to the industry average, which could imply that the company might be reinvesting a significant portion of its profits for growth or maintaining a conservative payout ratio.

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

The Dividend Growth Rate is a key indicator of how much a company's dividend payouts have increased over time. A growth rate higher than 5% signifies healthy and sustainable growth, which is attractive to long-term investors.

Investigating Symrise's (SY1.DE) dividend growth rate over the last 20 years reveals an average dividend ratio of approximately 6.95%. However, the yearly breakdown tells a more nuanced story. Notably, the dividend growth rate shows significant volatility. For instance, the dividend surged by 111.11% in 2020 only to plummet by -48.95% in 2021. This inconsistency could place a question mark on the sustainability and predictability of the company's dividends. Despite the average exceeding 5%, the erratic growth trajectory might be a red flag for risk-averse investors. Consequently, while the trend may appear good at a cursory glance, potential investors should be cautious and possibly investigate the reasons behind these fluctuations.

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

The average payout ratio indicates the proportion of earnings a company pays to its shareholders in the form of dividends. A payout ratio lower than 65% is considered sustainable as it implies the company retains enough earnings to invest in growth opportunities while rewarding shareholders.

The average payout ratio for Symrise over the past 19 years is approximately 41.3%, which is comfortably below the 65% threshold. With the exception of 2020, where the payout ratio spiked to 83.8%, Symrise has consistently maintained a payout ratio indicating sound financial health. This pattern is positive, as it suggests that the company has been able to balance rewarding its shareholders while retaining sufficient earnings to reinvest in its business. The relatively low average also cushions against potential earnings downturns and supports sustainable dividend payments.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

Examining Symrise's dividend coverage ratios from 2005 to 2023, we observe both increases and fluctuations. The primary metric here is the consistency of earnings covering dividends, crucial for assessing payout sustainability. Symrise's EPS has generally been on an upward trajectory, except during economic downturns or specific challenges. For instance, in 2009, with an EPS of €0.7138 and a dividend of €0.5, the coverage was about 0.70, illustrating solid sustainability. However, the figures did vary, dropping to 0.35 in 2021 and rising again to 0.50 in 2022. Symrise has to carefully manage this balance to maintain investor confidence. Overall, coverage ratios below 1 can be a concern, but consistent EPS growth provides reassurance. In summary, while there are fluctuations, the general trend of sustained earnings growth aiding dividend payments is a positive indicator.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow is crucial as it indicates a company's ability to sustain dividend payments from its operating cash flow without relying on external financing or asset sales.

Examining the free cash flow and dividend payout amount of Symrise (SY1.DE) from 2005 to 2023, we can note significant variability in the percentage of dividends covered by free cash flow. For instance, in 2008 the coverage was only about 58%, while in 2022 it dramatically soared to around 129.68%. This inconsistency emphasizes periods where cash flow struggled to cover dividends, which might signal potential risks in sustaining payments. Despite some fluctuations, the current trend shows improved coverage, with values well over 100% indicating robust cash flow management. However, past inconsistencies could point to volatility in operating performance, possibly affecting investor confidence in the predictability of dividend payments. Overall, while the recent upward trend is positive, Symrise should aim for more stable coverage over time to assure shareholders of reliable dividend payouts.

Stable Dividends Since the Company Began Paying Dividends?

Assess the stability of dividend payments by ensuring the dividend per share has not decreased by more than 20% annually over the past 20 years.

Firstly, we notice that there were no dividends paid from 2005 to 2007, with the first dividend of €0.5 being paid in 2008. Given that there were no drops of more than 20% in any individual year as per the data from 2008 onwards, we can consider Symrise’s dividend payment history to be quite stable. In fact, there has been consistent growth over most years, with some fluctuations. For instance, the jump to €1.9 in 2020, even if considered volatile, did not follow with a drop greater than 20% in subsequent years. This indicates a robust dividend policy that can be reassuring to income-seeking investors. Overall, it points to a good trend in dividend stability.

Dividends Paid for Over 25 Years?

Assessing whether a company has paid dividends for over 25 years provides insight into its financial health and consistency. A long history of dividend payments often indicates stability and a commitment to returning value to shareholders.

Symrise has been paying dividends only since 2008, which amounts to a history of 15 years as of 2023. This does not meet the criterion of paying dividends for over 25 years. However, it’s worth noting that Symrise has shown a consistent and growing dividend policy over these 15 years. Starting from a dividend of 0.5 EUR per share in 2008, the company has increased its payouts almost every year, peaking at 1.05 EUR per share in 2023. This growth is a positive signal and showcases the company's commitment to sharing profits with its investors, despite not meeting the 25-year mark.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Stock repurchases or buybacks can be an essential factor in dividend analysis as they often indicate a company's confidence in its financial health and its ability to generate future profits. They're also a method of returning value to shareholders without distributing dividends, potentially leading to an increase in earnings per share (EPS). Understanding Symrise's stock repurchase trends will provide insight into the company's strategic financial management.