Last update on 2024-06-27

Teleflex (TFX) - Dividend Analysis (Final Score: 5/8)

Get a detailed analysis of Teleflex's (TFX) dividend performance and stability based on an 8-criteria scoring system. Final Score: 5/8.

Short Analysis - Dividend Score: 5

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

The analysis evaluates Teleflex's (TFX) dividend policy using 8 criteria, scoring a 5 out of 8. Key points include: 1. Dividend Yield: Teleflex's current dividend yield of 0.5454% is below the industry average. However, its stock price has seen significant growth over 20 years, which may appeal to growth-oriented investors. 2. Dividend Growth: The company's dividend growth rate does not meet criteria as it has seen a significant decrease and cessation of payouts since 2010. 3. Dividend Payout Ratio: This ratio indicates how much of earnings are paid as dividends and suggests sustainability. 4. Dividend Coverage by EPS: Recently strong, but historical inconsistencies raise some concerns. 5. Dividend Coverage by Cash Flow: Important for assessing dividend sustainability during downturns. 6. Dividend Stability: Teleflex's steady dividends over 20 years show a reliable payoff, reflecting robust financial management. 7. Long-Term Dividend Payments: Considerations include consistency over 25 years. 8. Stock Repurchases: Moderate commitment, with some inconsistency over the past 20 years.

Insights for Value Investors Seeking Stable Income

Teleflex shows a mixed picture: its low dividend yield and reduced payouts may not suit income-seeking investors, but its strong stock price growth might attract those looking for capital gains. The stability of dividends is a positive sign, but the inconsistency in EPS and stock repurchases could be a concern. Therefore, it may be worth investigating further, especially for growth-focused investors, but it might not be the best pick for those looking for consistent dividend income.

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 measures the ratio of a company's annual dividend compared to its share price. A higher yield can indicate a lucrative return on dividend investments.

Teleflex's current dividend yield of 0.5454% is slightly below the industry average of 0.67%. Historically, the company's dividend yield has decreased significantly over the last 20 years, starting from 1.6139% in 2003 and reaching its current low. This downward trend indicates that the stock price has outpaced dividend growth. For investors seeking income, this trend can be disappointing as it reflects lower relative returns on investment. However, the high appreciation in Teleflex’s stock price from $48.33 in 2003 to $249.34 in 2023 suggests that the firm has focused more on capital gains rather than maintaining high dividend yields. This could be attractive to growth-oriented investors rather than those prioritizing dividend income. Thus, while not favorable for yield-seekers, the trend signifies robust capital appreciation.

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

The Dividend Growth Rate measures the percentage growth of a company’s dividend distribution over a specific period. It is important as it reflects the company’s ability to increase its dividend payouts over time, signaling financial health and shareholder value.

Examining the Dividend Ratio values for Teleflex (TFX) over the last 20 years, it is noted that there has been a significant decrease in the dividend payouts, with zeros starting from 2010. For instance, the dividend per share ratio was as high as 9.8592 in 2003 and consistently decreased, reaching 0 in 2010 and remaining at 0 thereafter. The inclusion of 7.6305 in 2008 and 0.4925 in 2009 indicate an already declining trend. The average dividend ratio over this period is 3.267. Given this data, the Dividend Growth Rate does not meet the criterion of being higher than 5%. This trend is unfavorable as it showcases Teleflex’s persistent decrease and eventual cessation of dividend payouts, which may raise concerns among investors looking for regular income through dividends.

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

Explain the criterion for Teleflex (TFX) and why it is important to consider

The payout ratio is a critical indicator of a company’s ability to sustain its dividend payments. A high payout ratio may signal that a company is paying out most of its earnings as dividends, which might be unsustainable in the long term.

Dividends Well Covered by Earnings?

This criterion measures the company's ability to cover its dividends with its earnings per share (EPS). It is calculated as the EPS divided by the dividend per share.

Analyzing the earnings per share (EPS) and dividend per share (DPS) for Teleflex (TFX) over a span of two decades reveals several key insights into its ability to cover dividends through earnings. In 2023, the EPS was 7.5845, while the DPS was 1.36, resulting in a dividend coverage ratio of approximately 5.58. This portrays a strong ability to cover dividends with earnings in recent years. For instance, in 2021 and 2019, the ratio was 7.63 and 7.34, respectively. However, in years like 2012, the company posted a negative EPS of -4.6515, leading to an unsustainable payout ratio. While recent trends indicate strong coverage, earlier inconsistencies reflect a risk factor that needs continual monitoring. Overall, the current trend is positive for dividend coverage, showcasing a robust profitability profile in recent years.

Dividends Well Covered by Cash Flow?

Explain why Dividends Well Covered by Cash Flow is important to consider.

A dividend well covered by cash flow ensures that the company can maintain its dividend payments even during economic downturns. This is crucial for the sustainability of dividends and indicates the financial health and operational efficiency of the company.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments for a period such as 20 years is vital for income-seeking investors as it reflects the company's consistent financial health and its commitment to returning capital to shareholders.

Over the past 20 years, the dividend per share for Teleflex (TFX) has shown remarkable stability. Starting from $0.78 in 2003 and rising steadily to $1.36 in 2023, this series exhibits no significant drop exceeding 20%. This consistency is an indicator of robust operational performance and prudent financial management. Moreover, the steady rise and subsequent stability ($1.36 since 2008) suggest that the company prioritized maintaining dividend levels. In terms of shareholder value, this provides income-seeking investors with a reliable financial return, thus making it a good sign for long-term investment. Given that there is no year where the dividend has dropped by 20%, Teleflex showcases strong dividend stability. Considering this trend, the outlook is positive as it underscores the company's resilience and capability to sustain dividend payouts through varied economic conditions.

Dividends Paid for Over 25 Years?

the criterion for Teleflex (TFX) and why it is important to consider

Dividends Paid for Over 25 Years?

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases are a sign that the company is committed to returning value to shareholders and potentially increasing earnings per share.

Teleflex (TFX) has demonstrated a mixed performance in terms of stock repurchases over the past 20 years. The total number of shares has not consistently decreased, with only five years showing a reliable reduction: 2006, 2007, 2016, 2017, and 2019. However, the overall average repurchase rate of 0.8389 suggests a moderate commitment to buybacks. This trend shows that while there have been periods of buyback activity, the commitment has not been strong or consistent enough to declare it a reliably good trend for long-term shareholders.