Last update on 2024-06-28

Amerco (UHAL) - Dividend Analysis (Final Score: 4/8)

Discover the in-depth analysis of Amerco (UHAL) dividends. Find insights on dividend stability, growth, and coverage over 20 years in this detailed report.

Short Analysis - Dividend Score: 4

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

The dividend analysis of Amerco (UHAL) evaluates performance and stability based on 8 criteria. Unfortunately, Amerco scored poorly with an overall dividend score of 4. Key points include a current dividend yield of 0%, which is significantly lower than the 2.55% industry average, and substantial fluctuations in dividend growth. Despite a positive note on maintaining a low payout ratio, dividends were not consistently covered by earnings or cash flow. Additionally, UHAL lacked stable, paid dividends and reliable stock repurchases over the past 20 years, making it less appealing for income-focused investors.

Insights for Value Investors Seeking Stable Income

Given the inconsistencies in dividend yield and growth, alongside poor coverage by earnings and cash flow, UHAL is not an ideal stock for income-seeking investors who prioritize stable and reliable dividends. The overall dividends' performance and stability are erratic, which indicates it's better to consider more stable options in the market. Only those who are less reliant on dividends should keep UHAL on their watchlist.

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 each year relative to its stock price. It's important as it indicates how much cash flow investors are getting for each dollar invested in an equity position.

Amerco (UHAL) has a current dividend yield of 0%, which is significantly lower than the 2.55% industry average. A deeper dive into the historical data reveals that UHAL has had relatively inconsistent dividend yields over the past 20 years. For instance, in 2005 and 2012, it showed acceptable yields of 0.737% and 3.9429% respectively, but in many other years, the dividend yield was zero. Notably, in recent years, UHAL has shown almost no dividend yield with figures of 0.0826% in 2021 and 0.1661% in 2022. This inconsistency and the particularly low current yield make it less attractive for income-focused investors. Despite occasional peaks in its dividend payouts, the general trend suggests that dividends are not a primary focus for UHAL. Relative to its industry, this poor showing in dividend yields could deter investors who prioritize regular income streams.

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

The Dividend Growth Rate criterion evaluates whether a company's dividends have increased consistently over the last 20 years. A growth rate above 5% is considered good.

The dividend per share ratio for Amerco (UHAL) shows substantial fluctuations over the past 20 years, with some years displaying negative dividend ratios and others showing high positive spikes. Specifically, 9 out of the 21 recorded years have negative dividend ratios. Instead of a consistent year-over-year growth, the fluctuations ranging from -100% to 400% make it difficult to define a stable dividend growth trajectory. According to the data, the average dividend growth rate stands at 15.59%, suggesting sporadic over-performances to counterbalance the declines. However, a consistent and stable dividend growth is more desirable for potential investors looking for steady income, rendering the current trend as less favorable despite the average percent. The conclusion is that Amerco's inconsistent dividend growth doesn't align well with the 5% consistent growth criterion, making this a bad trend for investors seeking stability and predictability.

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

Amerco's ability to maintain an average payout ratio lower than 65% over the past two decades suggests financial stability and a sustainable dividend policy. This metric is crucial as it indicates that the company retains enough earnings to reinvest in growth and innovation.

Amerco (UHAL) displays an outstanding record in managing its payout ratio. Over the last 20 years, the average payout ratio stands at 7.48%, significantly lower than the 65% threshold. The low payout ratio indicates that the company has consistently retained a considerable portion of its earnings for reinvestment, which fosters future growth. Even though 2020 witnessed an anomalous spike to 110.87%, it appears to be an outlier rather than a persistent concern. This trend is excellent for the company, suggesting robust earnings retention and prudent financial management that supports long-term shareholder value.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

Earnings Per Share (EPS) and Dividend Per Share (DPS) values show that Amerco's dividends are not well covered by its earnings. EPS is inconsistent, with significant fluctuations: as high as $40.3198 in 2016, dropping to $2.2549 in 2020, and varying thereafter. DPS also varies without a clear pattern. Notably, the dividend coverage ratio indicates insufficient earnings to cover dividends consistently, with 1.1x in 2020 being an anomaly. Hence, current trends suggest Amerco's dividends remain poorly aligned with its earnings.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow mean the company generates enough cash flow to support its dividend payments.

Analyzing the free cash flow and dividend payouts from 2003 to 2023, we observe that Amerco (UHAL) had no free cash flow and dividend payouts until 2017. From 2017 to 2023, the free cash flow has generally been in negative territory, except in 2021. In terms of dividend coverage, the ratio has been predominantly negative, indicating that the dividends were not well-covered by the free cash flow. In 2021, the ratio was positive at 0.52, highlighting a temporary good trend (TPC: 52%). However, the general trend has been negative, suggesting a warning sign for potential investors.

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.

Analysing the dividend distribution of Amerco (UHAL) over the past 20 years reveals an inconsistent payout history. There were several years in which the company did not pay any dividend, including 2003, 2004, 2007-2010, 2013, 2022, and 2023. When dividends were paid, the amounts varied significantly: $0.531 in 2005, increments of up to $5 in 2012 and subsequent occasional dips as low as $0.1 in 2022. This inconsistency indicates volatility, which can be disconcerting for income-focused investors relying on predictable dividends. The erratic presence and absence of dividends, coupled with changes, often larger than 20%, make UHAL an unreliable option for those prioritizing stable dividend income over a long-term horizon.

Dividends Paid for Over 25 Years?

25-year dividends stability criterion and its importance

Analyzing Amerco's dividend history from 1998 to 2023 to determine overall stability and the impact of inconsistencies in dividend payouts.

Reliable Stock Repurchases Over the Past 20 Years?

reliable stock repurchases over the past 20 years

Based on the data provided, Amerco (UHAL) does not exhibit a consistent or reliable trend of stock repurchases over the past 20 years. The majority of the years saw no change in the number of shares. The only significant repurchase occurred in 2015. This inconsistency suggests that Amerco has not prioritized returning capital to shareholders via stock buybacks, which can be a red flag to investors looking for steady capital return policies. The substantial fluctuation in the number of shares in 2015 and the years with zero shares need further explanation from the company's management to understand these anomalies.