Last update on 2024-06-27

Gen Digital (SYM.F) - Dividend Analysis (Final Score: 5/8)

Assess the performance and stability of Gen Digital (SYM.F) dividends using an 8-criteria scoring system. Final Score: 5/8. Learn more about the analysis.

Short Analysis - Dividend Score: 5

We're running Gen Digital (SYM.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The dividend analysis for Gen Digital (SYM.F) evaluates the company's performance and stability using eight criteria, resulting in a total score of 5 out of 10. Notable findings include a high dividend yield of 2.1929%, which is favorable compared to the industry average of 0.4%, but the company's dividend payouts have been extremely volatile in the past 20 years. The average dividend growth rate and payout ratios are inconsistent and sometimes negative, raising concerns about the sustainability and profitability of dividends. Additionally, dividends have fluctuated widely, suggesting unreliability. The company has not paid dividends for over 25 years and shows significant volatility in its dividend coverage by both earnings and free cash flow. Finally, while there has been some stock repurchase activity, it has also been inconsistent.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Gen Digital (SYM.F) does not appear to be a stable or reliable dividend-paying stock, especially for long-term, income-focused investors. The extreme volatility in dividend payouts and inconsistent financial metrics are red flags. While the current dividend yield looks attractive, the company's historical performance suggests caution. Investors seeking stable and dependable dividend income may want to explore other opportunities.

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 is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. A high dividend yield may indicate a good investment opportunity, provided that the payout is sustainable.

Gen Digital (SYM.F) boasts a dividend yield of 2.1929%, significantly higher than the industry average of 0.4%. Over the last 20 years, Gen Digital's dividend yield has shown remarkable volatility, peaking at an unsustainable 60.1343% in 2020, followed by normalization to around 2-2.5%. While the current yield is favorable compared to the industry, investors should be cautious about the company's historically erratic payout behavior. A consistent and moderate yield is preferable for long-term reliability.

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

The dividend growth rate higher than 5% is important as it indicates the company's ability to increase payouts over time, showing sustainability and profitability.

The Dividend Ratio data for Gen Digital (SYM.F) over the last 20 years shows highly irregular and negative values at various points. With an average Dividend Ratio of 186.899%, it appears disproportionately inflated due to extreme fluctuations, particularly in 2020 where we see an extraordinary value of 3471.4286%. These spikes distort the average growth rate, making it unreliable. The growth pattern doesn't exhibit consistency, meaning the dividend increases aren't stable or reliable. Thus, the company does not demonstrate a stable 5%+ growth rate. This trend signals a negative outlook based on these criteria, questioning its dividend sustainability.

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

Average payout ratio lower than 65% in the last 20 years?

The average payout ratio for Gen Digital (SYM.F) over the past 20 years is -116.09%, significantly lower than the 65% threshold. However, this negative value indicates inconsistencies and probable losses in certain years, which can distort averages. For instance, periods with extremely high negative payout ratios (such as -2521% in 2015) pull the average down dramatically. Between 2003 and 2012, the payout ratio was consistently 0, indicating no dividend payments despite possibly positive earnings. Post-2012, the incurred values vary widely, showcasing volatility. A stable and lower payout ratio within the set threshold suggests better financial health and earnings retention for growth. Gen Digital does not meet this criteria due to its extreme and indifferent payout ratios, reflecting potential fiscal instability or loss periods. Hence, the outlook seems unfavorable when interpreted over a long-term horizon.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

Analyzing the coverage of dividends by earnings is crucial for assessing the financial health and sustainability of a company’s dividend policy. If earnings per share (EPS) reliably and substantially covers the dividend per share (DPS), it indicates that the company generates sufficient profit to reward its shareholders without compromising its financial stability.

Dividends Well Covered by Cash Flow?

Assessing if dividends are well covered by a company's free cash flow is crucial because it indicates the sustainability of the dividend payments. Generally, a ratio above 1 indicates that the company generates enough cash to cover its dividend payments.

Upon analyzing the free cash flow and dividend payout amount for Gen Digital over the years, we observe significant volatility. In many years, the dividend covered by cash flow ratio is either zero or negative, indicating insufficient free cash flow to cover dividends. Only for a handful of years has the ratio surpassed 1, suggesting a healthy dividend coverage. Notably, in 2023, the ratio of 0.418 implies that the company generated less than half of the cash needed for dividend payouts. This trend indicates concerns over the sustainability of dividends, hinting at potential liquidity issues or over-aggressive dividend policies that are not backed by adequate cash flow generation.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over a long period reduce risk and increase reliability for income-seeking investors.

The provided data show widely fluctuating dividends in most years. For example, dividends rose sharply from 0.6 in 2014 to 4.375 in 2015 and then plunged again to 0.45 in 2017. Furthermore, in 2020, the dividend spiked significantly to 12.5, but subsequently dropped to 0.5 and stabilized there for the past three years. This erratic trend indicates that dividends were not stable, volatile over the years. A stable dividend history is crucial for income investors who depend on consistent payments for their income needs. In this case, Gen Digital (SYM.F) fails to offer the stability needed by conservative, income-focused investors.

Dividends Paid for Over 25 Years?

Dividend payment over 25 years is a vital metric often considered by long-term investors. Consistent dividends indicate a company's financial stability, and the ability to generate sustainable profits implies a reliable income stream for investors.

Gen Digital (SYM.F) has paid dividends for several years, but it does not meet the criterion of having paid dividends for over 25 years. Their first recorded dividend payment was in 2013. This trend is not favorable as it does not show the long-term stability often sought by conservative investors. Although the dividend per share has varied, including a high dividend of 4.375 in 2016 and an extraordinarily unusual 12.5 in 2020.

Reliable Stock Repurchases Over the Past 20 Years?

Criterion: Reliable stock repurchases over the past 20 years

The data indicates fluctuating trends in stock repurchases for Gen Digital, as illustrated by the number of shares outstanding from 2003 to 2023. A thorough analysis of the numbers can shed light on whether the trend is good or bad. Notably, reliable stock repurchases were implemented in the years 2006, 2014, 2018, 2021, and 2022. The average repurchase amount stands at 3263.394 shares over the last 20 years. It's crucial to examine if this trend aligns with market conditions and the company's strategic financial decisions.