Last update on 2024-06-27

ZEAL Network (TIMA.DE) - Dividend Analysis (Final Score: 1/8)

ZEAL Network (TIMA.DE) dividend analysis: Final Score 1/8. Assessing performance and stability with an 8-criteria scoring system.

Short Analysis - Dividend Score: 1

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

The ZEAL Network (TIMA.DE) dividend evaluation using an 8-criteria system reveals several areas of concern. The company's dividend yield is high but inconsistent. The dividend growth rate is negative on average, showcasing volatility. With an average payout ratio of 208.93%, the company often pays more in dividends than it earns, which is unsustainable. Dividends are better covered by earnings and cash flow recently, but historical instability poses risks. The dividends have not been stable or paid consistently over the past 25 years. While stock repurchase activities are present, they lack consistency.

Insights for Value Investors Seeking Stable Income

Based on the analysis, potential investors should approach ZEAL Network with caution. The high dividend yield is offset by volatility and unsustainable payout ratios. Improved recent financial health is a positive sign, but the long-term inconsistency in dividends and earnings coverage poses a risk. Investors seeking stable and reliable dividends might want to consider more consistent dividend-paying stocks.

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?

The dividend yield is the ratio of a company's annual dividend compared to its share price. It's essential as it indicates the potential cash return on investment.

ZEAL Network's current dividend yield of 7.8078% is notably higher than the industry average of 5.32%. Over the last two decades, the company's dividend yield has been quite volatile, with significant peaks in 2014 (19.1083%) and recently in 2023 (7.8078%). This higher yield can be enticing for income-focused investors; however, the consistency of dividend payments has been unstable, evidenced by the years with zero yields. This trend can be both positive and negative. Positively, a high yield can attract investors. However, the instability might deter risk-averse investors seeking steady income, which could reflect deeper financial or operational issues within the company.

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

The Dividend Growth Rate (DGR) measures the annualized percentage rate of growth in the dividends per share. A higher DGR indicates greater investor confidence and may correlate with strong financial health.

The Dividend Growth Rate for ZEAL Network (TIMA.DE) over the last 20 years shows considerable volatility. The provided dividend per share ratios indicate multiple years with a dividend of zero and some years with negative ratios, reflecting cuts or suspensions. A few years show positive dividends, particularly in the last few years (2021-2023), where dividends have grown in double digits, reaching 136.3636 in 2023. However, the average dividend ratio is negative at -7.79333, suggesting a long-term DGR far below the desired 5%. This volatility and overall negative growth are concerning, indicating inconsistency in dividend payments and possibly underlying financial instability. This trend is generally bad for a company aiming for steady and reliable dividend growth.

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 shareholders in the form of dividends. A lower ratio (usually below 65%) suggests that the company retains enough earnings to reinvest in the business, supporting future growth.

ZEAL Network's average payout ratio over the last 20 years stands at approximately 208.93%, significantly exceeding the preferred threshold of 65%. The high ratios in years like 2015 (1182.78%) and 2016 (1744.55%) heavily influence this average. A payout ratio consistently above 100% means the company often pays more in dividends than it earns, which is unsustainable in the long run. This trend indicates potential concerns about the company's financial stability and questions its ability to maintain such dividend payments without jeopardizing its growth or financial health.

Dividends Well Covered by Earnings?

Dividends are payments made to shareholders from a company's earnings. It is important that dividends are well covered by earnings because this indicates that the company is generating sufficient profits to comfortably pay dividends without risking its financial stability. This criterion is fundamental for assessing a company's dividend sustainability and the potential for future dividend growth.

Analyzing ZEAL Network's earnings per share (EPS) and dividend per share (DPS) from 2004 to 2023 reveals notable trends. A key metric is the dividend cover ratio (EPS/DPS), indicating the company's ability to cover dividends with its earnings. A ratio above 1 generally signifies sufficient coverage. ZEAL Network shows mixed performance: Between 2004 and 2009, the company frequently did not pay dividends or had insufficient earnings, leading to a cover ratio of 0. From 2010, there are significant fluctuations. When dividends were reinstated in 2014, the cover ratio spiked to levels indicating strong earnings relative to dividends—in 2014, the cover ratio reached excessive levels (11.828), suggesting payout inconsistency. Despite this, recent years, particularly 2019 through 2023, exhibited healthier cover ratios (ranging from 1.54 to 4.38), implying improved earnings consistency and a more sustainable dividend practice. High cover ratios like 2020's (2.191) and 2023's (4.382) illustrate robust earnings enveloping the dividend payouts. Hence, the recent trend signifies better financial health and the ability to sustain or grow dividends. However, expecing future stable dividend payments necessitates continuous positive earnings trends.

Dividends Well Covered by Cash Flow?

Examining whether dividends are well covered by cash flow is crucial as it indicates the company's ability to sustain dividend payments without compromising its financial stability. A higher ratio signifies healthier coverage.

Over the period from 2012 to 2023, ZEAL Network's free cash flow has fluctuated significantly, with particular volatility in dividend payout amounts. Notably, the ratio of free cash flow to dividend payout shows periods of strong coverage (e.g., 3.047 in 2014 and 3.157 in 2023) and periods of less robust coverage (e.g., 0.223 in 2018). While in some years the coverage is exceptionally high, indicating a comfortable payout ability, in other years the low ratio could pose concerns about sustainability. Overall, despite some years of lower coverage, the trend showcases ZEAL Network's ability to support its dividend payments with its free cash flow, reflecting reasonably good financial health and capacity.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends refer to the annual payouts provided to shareholders by a company. The importance of stable dividends lies in its ability to assure income-seeking investors of reliable and consistent returns over time. A fluctuation, especially a drop większy niż by more than 20% in the dividend payment, could signal potential financial instability within the company and may adversely affect investor confidence.

Over the past 20 years, ZEAL Network (TIMA.DE) has exhibited significant fluctuations in dividend payments. Notably, there were multiple years (2004, 2005, 2006, 2007, 2010, 2011, 2012, 2013, and 2019) where the dividend per share was zero, indicating no payouts. For instance, the dividend per share was 0 from 2004 to 2007 and again from 2010 through 2013. Such inconsistency is a cause for concern; however, since the company's dividend did not drop by more than 20% in any single year, it meets the given criterion. It should be noted though that dividend stability for income-seeking investors might still be questionable due to the absolute zero payouts experienced over certain years. This concept implies that while there wasn't a sharp drop on a percentage basis when comparing year-on-year data, the very fact that no dividend was given out poses a drawback.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years is an important metric as it shows the company's consistent track record in returning profits to shareholders over a long period, indicating financial stability and ongoing profitability.

ZEAL Network (TIMA.DE) has not paid dividends consistently for over 25 years. According to the data provided, the company only started paying dividends in 2008 and has shown an inconsistent dividend history since then. Despite a notable dividend payment in 2014 (7.5 per share), there were several years with no dividends, particularly before 2008 and between 2010-2013 and in 2016 and 2017. This inconsistency can be a red flag for dividend-focused investors as it signals potential volatility in the company's profitability and financial planning. However, in recent years post-2019, there has been a trend towards regular dividends once more, increasing from 0.8 in 2020 to 2.6 in 2023. This recent trend is positive but does not mitigate the overall inconsistency in their long-term dividend history.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company's confidence in its own financial health and its commitment to returning value to shareholders. Companies that consistently repurchase shares often signal management’s belief that the stock is undervalued and that repurchasing shares is a good use of cash, enhancing shareholder value.

ZEAL Network (TIMA.DE) has undertaken stock repurchases in discrete years over the past two decades. Specifically, the company has actively repurchased shares in 2007, 2008, 2009, 2010, 2018, 2022, and 2023. These years of repurchases suggest strategic deployment of excess capital during these periods, likely when the management believed the company's stock was undervalued or to optimize the capital structure. However, the frequency and aggregate effect appear somewhat sporadic. For example, the average reduction in share count due to repurchases is approximately 8.50 million over the past 20 years, translating to significant spikes particularly in 2018 and 2020 onwards. Based on these numbers, it indicates a trend where ZEAL Network interprets favorable market or company-specific conditions to engage in repurchases, but lacks a consistent annual program, which could be a point of scrutiny for investors preferring regular returns. Therefore, the trend is relatively commendable but shows room for improvement in consistency.