Last update on 2024-06-27

Telenet Group Holding (T4I.F) - Dividend Analysis (Final Score: 5/8)

Telenet Group Holding (T4I.F) Dividend Analysis revealing a final score of 5/8 for performance and stability. Learn detailed insights and criteria now!

Short Analysis - Dividend Score: 5

We're running Telenet Group Holding (T4I.F) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Telenet Group Holding's (T4I.F) dividend analysis yields a score of 5 out of 8, reflecting mixed performance in several key areas. The company's current dividend yield is notably higher than the industry average, indicating a strong return for shareholders. However, the analysis points out a worrying inconsistent dividend growth rate, with significant declines in recent years. The payout ratio is comfortably below the 65% threshold, suggesting a sustainable policy in theory, but both earnings and cash flow coverage show concerning downward trends. Additionally, Telenet has only been paying dividends since 2020 and lacks the long-term stability many income investors seek. On a positive note, Telenet has consistently engaged in share repurchases, adding some value for shareholders. Overall, these mixed findings highlight both strengths and potential risks in Telenet's dividend policy.

Insights for Value Investors Seeking Stable Income

Given the mixed performance, investors need to carefully weigh the strengths and weaknesses. While Telenet offers a high current yield and a low payout ratio, their inconsistent dividend growth, limited payout history, and recent declines in coverage ratios may indicate potential risks. For income-focused investors seeking stable and consistent dividends, Telenet might not be the best choice. However, for those open to some risk and interested in short-term higher yields and stock repurchases, it could be worth a closer look. Evaluate individual risk tolerance and investment goals before making a decision.

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 represents the ratio of a company's annual dividend compared to its share price. It is an important metric for income-focused investors and is often compared to industry averages to gauge relative attractiveness.

Telenet Group Holding (T4I.F) boasts a current dividend yield of 4.7483%, which is significantly higher than the industry average of 3.56%. This suggests that Telenet is returning more cash to its shareholders relative to its share price than its industry peers. Historically, Telenet's dividend yield spiked significantly starting in 2020 with yield values above 7%, far exceeding the industry averages, indicating a strong dividend policy. However, the recent yield of 4.7483% is a reduction from previous years' near 9% yields, likely due to the decrease in stock price. The high yield amidst a lower stock price may also signal potential risks or market perceptions about future growth.

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

The Dividend Growth Rate measures the annualized percentage rate of growth in a company's dividend payments over a given period, which is key for income-focused investors to understand if the company is committed to sharing profits with shareholders.

Telenet Group Holding has shown inconsistent dividend patterns over the past 20 years as reflected in the Dividend Per Share Ratio values. The sharp drop to -50 in 2022 followed by -27.2727 in 2023 indicates a negative growth rate. This results in an Average Dividend Ratio of -3.73304, which is well below the 5% growth threshold. The company's inability to consistently grow or maintain dividends can be concerning for income-focused investors, casting doubts on its commitment and capacity to reward shareholders consistently.

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

The payout ratio measures the proportion of earnings a company pays to shareholders in dividends. A lower ratio indicates a sustainable dividend.

For Telenet Group Holding (T4I.F), the average payout ratio over the last 20 years is approximately 8.89%, which is significantly lower than the 65% threshold. This relatively low average payout ratio suggests that the company has been retaining a large portion of its earnings for reinvestment or other purposes, potentially providing a cushion in periods of lower earnings. Apart from the years 2020 (86.47%), 2021 (76.30%), and 2022 (14.97%), the firm exhibited extremely conservative dividend payment behavior. This overall trend can be considered good as it suggests the firm is maintaining a sustainable dividend strategy, with ample buffer to maintain or potentially increase dividends during economic downturns or capital-intensive periods.

Dividends Well Covered by Earnings?

Dividends well covered by earnings indicate that the company is generating sufficient profit to cover its dividend payouts. This reflects dividend sustainability and financial health.

Telenet's earnings per share (EPS) fluctuate significantly, especially notable in 2023 with an EPS of 0, whereas the highest value recorded is 9.1852 in 2022. Concurrently, dividends per share (DPS) began only from 2020, showing steady but declining values: from 2.68 in 2020 to 1 in 2023. The coverage ratio indicates that dividends became sustainable in 2020 with 0.864, but notably declined to 0.149 and finally 0 in 2023. Hence, the trend shows a worrying decline in earnings ability to cover dividends, marking a negative trend in recent years.

Dividends Well Covered by Cash Flow?

This criterion evaluates how well the company's dividends are covered by its free cash flow as generating enough cash to cover dividends is crucial for sustainability.

Examining Telenet Group Holding's free cash flow and dividend payout amount over the years reveals certain discrepancies and trends. Specifically, high coverage ratios in some initial years like 2007 (48.31) sharply decline in subsequent years. Stability is observed post-2011, but the coverage ratios hover below 1, signifying cash flow insufficiency to cover dividends completely. 2020-2023 shows a positive run, notably 2021 (0.546), but the inconsistency flags caution. Mixed signals suggest moderate risk as the trend primarily lacks strong affirmation.

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.

Telenet Group Holding has not maintained stable dividend payments for 20 years as stipulated. It began paying dividends from 2020, with no payments in preceding years. Given the limited data, we can only assess from 2020 onwards. The dividend per share dropped from €2.75 in 2021 to €1.375 in 2022, and further to €1 in 2023. This represents a 50% decrease from 2021 to 2022 alone, which contravenes the criterion of stability. Therefore, Telenet's dividend payment history does not meet the stability criterion, making it less attractive for income-seeking investors who prioritize consistency.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years examines the company's consistency and commitment to returning value to shareholders over a long duration, which is critical for evaluating the reliability and attractiveness of an investment, particularly for income-focused investors.

Telenet Group Holding has not paid dividends for over 25 years. Based on the provided data, the company has been paying dividends only since 2020. While it is commendable that Telenet has paid dividends for the last four years, it falls short of the 25-year criterion. For the years listed, the dividends per share have ranged from 2.68 EUR in 2020 to 1 EUR in 2023. The trend shows a decreasing dividend over the recent years, which might be a concern for investors seeking consistent or growing income streams. The reduction from 2.68 EUR in 2020 to 1 EUR in 2023 could be indicative of financial constraints or reinvestment needs within the company. This trend might be perceived negatively by long-term, income-focused investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate consistent return of value to shareholders and stock price support.

The reliable stock repurchases for Telenet Group Holding from 2016 to 2023 demonstrate a consistent trend of reducing outstanding shares. The number of shares decreased from 116,689,291 in 2015 to 108,609,600 in 2022. Despite the data for 2023 not being available, the average annual repurchase rate of approximately -4.0033% indicates a positive trend for this criterion, reflecting the company's commitment to enhancing shareholder value by consistently buying back shares, thus increasing the value per share for existing shareholders.