Last update on 2024-06-27

Talanx (TLX.DE) - Dividend Analysis (Final Score: 5/8)

Talanx (TLX.DE) dividend analysis: Score 5/8. Evaluates the performance and stability using 8 criteria. Discover insights and strategic investment potential.

Short Analysis - Dividend Score: 5

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

The dividend analysis evaluates the performance and stability of Talanx (TLX.DE) using an 8-criteria scoring system. The company's dividend score is 5 out of 8. Key findings: 1) Talanx's dividend yield for 2023 is 3.0936%, lower than the industry average of 3.85%, but its stock price has increased significantly from €21.48 in 2012 to €64.65 in 2023. 2) The dividend growth rate has been inconsistent, and the average rate is below the desired 5%. 3) The average payout ratio is 27.9861625%, indicating a sustainable dividend policy. 4) Dividends are well-covered by earnings with payout ratios mostly below 50%. 5) Dividends are generally well-supported by cash flow, though there are some anomalies. 6) There is stability in dividends since 2013, with a consistent increase. 7) Talanx has not paid dividends for over 25 years, with payments starting in 2013. 8) There is unreliability in stock repurchase behavior over the years. Overall, Talanx shows stable financial health with some areas needing further scrutiny.

Insights for Value Investors Seeking Stable Income

Talanx (TLX.DE) appears to be a stable but not outstanding dividend stock. Its strengths lie in a sustainable payout ratio, well-covered dividend payments by earnings, and consistent dividend increases since 2013. However, the lower than industry average dividend yield, inconsistent dividend growth rate, and lack of a 25-year dividend history are notable downsides. Investors looking for long-term steady income might consider Talanx a safer option due to its financial stability, but those seeking high and rapid dividend growth might want to explore other opportunities. It is worth considering depending on specific investment goals.

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 relative to its stock price. It is important for assessing income potential.

The dividend yield of Talanx for the latest year, 2023, is 3.0936%, which is lower than the industry average of 3.85%. Over the past 16 years, Talanx's dividend yield has shown variability, peaking at 4.7487% in 2014 and gradually declining to 3.0936% in 2023. This trend suggests diminishing returns in terms of income compared to holding Talanx shares, foregrounding the need to evaluate whether the company’s stock price robustness or other financial metrics can offset this relatively lower yield. The stock price has shown an upward trajectory from €21.48 in 2012 to €64.65 in 2023, indicating capital appreciation despite a decreasing dividend yield. The dividend per share has also increased steadily from 1.05 in 2013 to 2 in 2023. Although the current dividend yield is lower than the industry average, the consistent history of dividend payments and stock price appreciation makes Talanx a potentially less risky but stable investment.

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

The Dividend Growth Rate represents the annualized percentage rate of growth in a company's dividend payments. A rate above 5% is generally a good sign.

Talanx's dividend growth rate data over the years shows varying and inconsistent values. Specifically, from 2008 to 2013, no dividends were issued. From 2014 onwards, the dividend growth rates fluctuated, starting with a high of 14.2857% in 2014 and rising significantly to 25% in 2023. Thus, the average Dividend Growth Rate over the provided years is considerably below the desired 5%, marking it an inconsistent player in delivering dividend growth year after year. This inconsistency tends to be a negative aspect from an investor's perspective, especially for those who consider long-term, steady income through dividends as crucial.

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

Average Payout Ratio lower than 65% over the last 20 years, indicating sustainable dividend policy

Upon examining the payout ratio data for Talanx (TLX.DE) over the period from 2008 to 2023, it is clear that the company has maintained a conservative and sustainable dividend policy. The average payout ratio of 27.9861625% over these 16 years is well below the 65% threshold typically recommended for ensuring that dividends are sustainable and do not overly strain the company’s finances. This trend is particularly noteworthy given sporadic increases and decreases in the payout ratio. Notably, Talanx has had periods with no payout ratio data (2008-2012 and 2023), which might be due to either a lack of dividend payments or undisclosed data. However, the years with available data reflect a strong capability to pay dividends without compromising their financial stability. High peak values like 58.5183% and 57.3641% in 2020 and 2022, respectively, are exceptions rather than the norm. These findings suggest that Talanx has a disciplined approach towards its dividends, striving to balance shareholder returns with its long-term financial health. Such a strategy instills confidence in the firm's commitment to maintaining prudent financial practices.

Dividends Well Covered by Earnings?

Dividends covered by earnings reflect a company's ability to sustain its dividend payouts from net income, crucial for dividend reliability.

Analyzing Talanx’s earnings per share (EPS) and dividend per share (DPS) from 2008 to 2023 demonstrates how well dividends are covered by earnings, indicating financial health and dividend sustainability. The payout ratios from 2013 to 2022 cover a wide range from 34.81% to 58.52%, showing mostly a trend below 50%, which is often considered healthy as companies retain sufficient earnings to reinvest and withstand downturns. Low payout ratios in 2013-2016 show conservative financial management with growing confidence post-2017 as payout ratios generally increase yet remain below sustainable levels. The 0% ratio in 2023 raises questions about a possible earning shortfall or strategic decision, presenting a bad trend needing further scrutiny to understand its cause and future implications.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow evaluate whether a firm's free cash flow is sufficient to support its dividend payments. This is crucial as it indicates financial health and sustainability of dividends.

Talanx's free cash flow over the years ranges from approximately €861 million to €9.88 billion, while its dividend payout amounts range from €18 million to €939 million. The ratio of dividends covered by cash flow fluctuates between 0.003 and 0.25. Although a higher coverage ratio is generally preferred, indicating more sustainable dividends, Talanx's ratios demonstrate varying levels of safety. Notably, years like 2009 and 2010 show extremely low coverage, which might raise concerns. Overall, the trend in recent years suggests improvement, highlighting more reliable dividend support from cash flow, yet it's essential to scrutinize specific years for anomalies.

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.

Reviewing Talanx's dividend per share over the past 20 years reveals several important details: from 2008 to 2012, the dividend remained at zero, indicating either non-distribution or reinvestment phases. However, beginning in 2013, there has been a consistent upward trend. Notably, the dividend per share increased from EUR 1.05 in 2013 to EUR 2.00 in 2023. This growth pattern signifies an annual increment in dividends without any drops by more than 20%. Although the initial phase (2008-2012) saw no dividend distributions, the following consistent growth demonstrates strong financial health. However, for income-seeking investors who prioritize historical dividend payments, the zero-dividend years might be seen as a negative aspect. Yet, the company's commitment to increasing dividends in later years aligns well with their long-term goals. Therefore, the overall trend regarding stability is positive after 2013, despite the early setbacks.

Dividends Paid for Over 25 Years?

A company that has been paying dividends consistently for over 25 years demonstrates financial stability and a commitment to returning value to shareholders.

Talanx (TLX.DE) does not meet the criterion of paying dividends consistently for over 25 years. As indicated by the data, Talanx began paying dividends in 2013 with a dividend per share of €1.05 and has steadily increased its dividend payout up to €2.00 in 2023. While the increasing trend in dividends is generally a positive indicator of financial health and growing profitability, the fact remains that Talanx has only 11 years of dividend payment history. Therefore, it does not fulfill the requirement of a 25-year dividend history, even though its recent performance is favorable.

Reliable Stock Repurchases Over the Past 20 Years?

Stock repurchases, or share buybacks, indicate a company’s confidence in its own financial stability. It often suggests that a company believes its stock is undervalued.

Analyzing Talanx (TLX.DE) over the past 20 years, the number of shares was consistent at 208 million until 2012, after which it increased to 253 million by 2022, showing no regular repurchases. In fact, the average repurchase rate was -5.2779%, suggesting nominal or no repurchase activity. In 2023, the number of shares dropped to zero, possibly indicating a corporate restructuring or data anomaly. Overall, Talanx has shown unreliable stock repurchase behavior, a negative trend indicating a lack of share buyback commitment.