Last update on 2024-06-27

Suedzucker (SZU.DE) - Dividend Analysis (Final Score: 6/8)

Analyze the stability and performance of Suedzucker (SZU.DE) dividends over 20 years using our 8-criteria scoring system. Final Score: 6/8.

Short Analysis - Dividend Score: 6

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

Suedzucker (SZU.DE) performs fairly well in terms of dividend yield, maintaining a current dividend yield of 4.9331%, which surpasses the industry average. The dividend growth rate fulfil the criteria for consistent growth, and the payout ratio remains below the recommended threshold, though several anomalies suggest fluctuations in the company's financial stability. Dividends have been well-covered by cash flow recently, despite historical volatility with negative earnings in certain years, which raises red flags. The stability of dividend payouts has seen major drops in the past, causing inconsistencies that might concern income-seeking investors. The company has a long history of paying dividends with only one missed year. However, share repurchases have been inconsistent, indicating an intermittent commitment to returning value to shareholders. Overall, Suedzucker demonstrates moderate stability and reliability with some caution needed over certain years where financial stress was evident.

Insights for Value Investors Seeking Stable Income

Given Suedzucker's strong dividend yield and its ability to pay dividends over the long term, it could be a worthy consideration for dividend-focused investors. However, potential investors should be cautious about the historical financial volatility and unstable periods that have led to significant drops in dividends. While the company shows signs of financial health and a commitment to shareholders, the inconsistency in dividend payouts and occasional negative earnings should prompt a closer examination before making investment decisions. Diversifying your investments and monitoring the company's financial performance regularly could mitigate some of the risks.

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

Suedzucker's current dividend yield of 4.9331% significantly exceeds the industry average of 1.77%. This is a positive indicator for income-focused investors as it indicates a higher return on investment through dividends. Historically, Suedzucker's dividend yield has fluctuated significantly over the past 20 years, ranging from a low of 1.2188% in 2019 to a high of 8.3577% in 2014. The company's ability to offer dividends higher than the industry average consistently suggests robust financial health and a commitment to returning value to shareholders. Moreover, the spike in dividend yield in 2014 and the recent surge to 4.9331% might reflect periods of lower stock prices or significant profit distributions.

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

the criterion for Suedzucker (SZU.DE) and why it is important to consider

The dividend growth rate criterion evaluates whether the dividend per share has consistently grown by 5% or more annually over the last 20 years. This metric is essential for investors aiming for long-term capital appreciation and regular income since steady dividend growth often signals a company's strong financial health and robust earnings capacity.

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

The payout ratio measures the percentage of earnings a company pays to shareholders in dividends. A ratio below 65% indicates good financial health.

Suedzucker's average payout ratio over the last 20 years is approximately 51.83%, which is below the threshold of 65%. This trend is positive as it suggests that the company maintains a healthy balance between paying dividends and retaining earnings for growth. However, extreme outliers like the 400% in 2008 and negative payout ratios in 2019-2021 can indicate periods of financial stress. Overall, the company has managed its payout ratio well despite these anomalies.

Dividends Well Covered by Earnings?

Dividends are well covered by earnings when the Earnings Per Share (EPS) sufficiently exceed the Dividend Per Share (DPS). This ratio is imperative as it shows the company's ability to sustain dividend payments from its earnings.

Examining the data over the past two decades reveals a fluctuating trend in Suedzucker's ability to cover dividends with earnings. High points were achieved in years like 2012, when the EPS of 2.5191 made it comfortable to cover the DPS of 0.7 (payout ratio ~ 27.78%). However, there were years with concerning disparities, such as 2019 and 2020, where the EPS was negative, leading to a nonexistent coverage ratio and demonstrating that the company was likely relying on reserves or borrowing to cover dividends. The negative EPS years (2019 and 2020) indicate financial strain or operational inefficiencies. The trend improves significantly by 2023, with a positive EPS of 2.0183 covering a DPS of 0.7, showing a robust payout ratio of ~34.68%, marking a favorable return to sustained earnings and healthier financial footing. Investors might find this recent data encouraging, but the historical volatility suggests a need for cautious optimism.

Dividends Well Covered by Cash Flow?

Explain the criterion for Suedzucker (SZU.DE) and why it is important to consider

Dividends well covered by cash flow signify that the company generates ample cash to cover its dividend outflows, an essential indicator of financial health. This measure is crucial as it illustrates the company's ability to sustain dividends during varying market conditions without relying on external funding or asset sales. A dividend coverage ratio above 1 indicates that the free cash flow exceeds dividend payments, while a ratio below 1 suggests the opposite, potentially raising red flags about dividend sustainability. We will explore the FCF and dividend payout over the years to understand this dynamic for Suedzucker.

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.

The annual dividend per share for Suedzucker (SZU.DE) from 2003 to 2023, reveals several periods of notable fluctuations. Notably, the dividends dropped from EUR 0.9 in 2013 to EUR 0.25 in 2015, a substantial removal in the payout by over 70%. Another significant drop was observed in 2018 with dividends going from EUR 0.45 to EUR 0.2 in 2019, a reduction of approximately 56%. Although some periods recorded incremental increases, and even a recovery to EUR 0.7 in 2023, these declines articulate a risk factor for income-seeking investors who prioritize consistency in dividend payout. This volatility could suggest underlying uncertainties in the company's cash flows or strategic financial difficulties during those years, which should be heartily taken into consideration when forming an opinion on dividend stability.

Dividends Paid for Over 25 Years?

Consistency of dividend payouts over a long period reveals company's financial stability and shareholder commitment.

Analyzing the data from 2000 to 2023, it is clear that Suedzucker has consistently paid dividends each year without any interruptions, meeting the 25-year benchmark except for one year, displaying long-term stability and commitment to shareholders. Dividend per share ranges from 0.2 EUR to 1 EUR, with spikes indicating good financial health during particular years. This positive trend reflects a stable and resilient business model, making Suedzucker a reliable option for dividend-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Interpret the overall trend of stock repurchases for Suedzucker over the past 20 years and evaluate its reliability as a criterion for dividend analysis.

Examining Suedzucker's share repurchase history over the last 20 years reveals instances of significant stock repurchases in specific years, namely in 2009, 2013, 2016, 2022, and 2023. These occurrences suggest some level of commitment to returning value to shareholders through stock buybacks. The stable number of shares over many years with sudden repurchasing suggests strategic planning. However, with an average repurchase ratio of 15.7505, it doesn't exhibit a high degree of consistency. Therefore, it showcases an intermittent buyback policy. Consistency in share repurchases could have contributed to a more dependable and attractive dividend profile. The signs are moderate but do tend to favor prudent maneuvers to occasionally optimize shareholder returns, reflecting mostly positively although not overwhelmingly reliable.