Last update on 2024-06-28

VERBIO Vereinigte BioEnergie (VBK.DE) - Dividend Analysis (Final Score: 5/8)

Explore our in-depth dividend analysis for VERBIO Vereinigte BioEnergie (VBK.DE) including a thorough evaluation based on an 8-criteria scoring system.

Short Analysis - Dividend Score: 5

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

This analysis focuses on the dividend performance and stability of VERBIO Vereinigte BioEnergie (VBK.DE) through the 8-criteria scoring system. VERBIO's current dividend yield (0.6693%) is notably below the industry average (3.02%) and has fluctuated over 20 years. The dividend growth rate is inconsistent with significant non-payment periods, failing to maintain a growth rate above 5%. The average payout ratio over 16 years is quite low at ~11.7%, reflecting a conservative dividend policy. Earnings have had mixed coverage of dividends, with strong performance in the mid-2010s but recent weakening trends. Cash flow has been volatile with significant negative periods, suggesting challenges in long-term dividend sustainability. Dividends have shown stability since 2016. However, the company does not meet the criterion of paying dividends for over 25 years with only 6 years of history. Finally, stock buybacks have been inconsistent, occurring mainly in 2009-2010, indicating no strong focus on returning capital via repurchases.

Insights for Value Investors Seeking Stable Income

Given the analysis, VERBIO Vereinigte BioEnergie (VBK.DE) currently exhibits moderately unattractive traits for investors seeking stable and high dividend yields, consistent dividend growth, and long-term dividend reliability. The short dividend history, inconsistent payments, and fluctuating financial metrics outweigh the minimal positives like stable dividends since 2016 and low payout ratios. Therefore, unless the company substantially enhances these performance metrics, it may not be the best candidate for income-focused investors. However, investors valuing growth potential over consistent income might still consider it.

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?

Explain the criterion for VERBIO Vereinigte BioEnergie (VBK.DE) and why it is important to consider

Dividend yield is an important metric as it indicates the return on investment that a shareholder would get solely from dividends. VERBIO's current dividend yield of 0.6693% is substantially lower than the industry average of 3.02%. Over the last 20 years, the company's dividend yield has significantly fluctuated, achieving higher values primarily between 2016 to 2019. However, it currently stands well below its past highs and the industry average. This trend suggests that VERBIO may not be an attractive option for income-focused investors looking for stable and reliable dividend returns compared to other industry stocks.

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

Criterion 1.1: The Dividend Growth Rate is higher than 5% in the last 20 years

Based on the given Dividend Ratio data for VERBIO Vereinigte BioEnergie (VBK.DE), there is a noticeable inconsistency in the dividends paid out. From 2008 to 2015, the company did not pay any dividends at all, which signifies zero growth during this period. Starting in 2016, there is a single year with a dividend ratio of 50, then a drop to 33.333 in 2017, followed by subsequent years with no dividends again. This inconsistent payout and the non-payment periods dominate the overall trend. The dividend growth rate, therefore, cannot be said to be consistently above 5% when considering the entire 20-year period. In fact, the growth rate could be considered non-existent or negative due to the lack of consistent annual payments. This trend is not favorable for investors relying on dividends as a source of income, as it does not provide a reliable or predictable pattern of income.

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

The payout ratio is a financial metric that shows what percentage of a company's earnings are distributed to shareholders in the form of dividends. Keeping this ratio below 65% allows the company to reinvest a significant portion of profits back into the business.

VERBIO Vereinigte BioEnergie (VBK.DE) has maintained an average payout ratio of 11.65713125% over the past 16 years, significantly below the 65% threshold. This is a good trend as it indicates that the company retains a considerable portion of its earnings for reinvestment, which can foster sustainable growth and stability. The consistently low payout ratio, except for the anomaly in 2018 where it spiked to 84.4238%, demonstrates a conservative dividend policy aimed at ensuring future profitability and operational resilience.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings. This criterion ensures that the company generates enough profits to support its dividend payouts, indicating financial stability and reducing the risk of dividend cuts.

Analyzing the dividend coverage ratios from 2008 to 2023, it is evident that VERBIO Vereinigte BioEnergie (VBK.DE) has had mixed results. Particularly interesting is the period from 2016 to 2023, where the coverage ratio firstly improves significantly and then stabilizes. For instance, the coverage ratio in 2016 is 0.13, which climbs to 0.18 in 2017 before peaking at 0.84 in 2018. Post-2018, however, there is a decline, noted at ratios like 0.13 in 2021, 0.04 in 2022, and 0.10 in 2023. This suggests that while VERBIO had strong earnings relative to its dividends in the mid-2010s, recent trends show a slight weakening in this important financial metric. Despite the dip, the presence of earnings even in recent years suggests that dividends have not become unsustainable, allowing for cautious optimism. However, investors should remain watchful, as a continued downward trend could pose risks.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that the company generates enough cash flow to cover its dividend payouts. It's a sign of financial health and sustainability.

The trend in Free Cash Flow (FCF) for VERBIO Vereinigte BioEnergie (VBK.DE) over the past 16 years exhibits significant volatility. The company had substantial negative free cash flow in multiple years, including -84.17 million EUR in 2008 and -177.12 million EUR in 2023. However, there are also years of robust cash flows, such as 210.15 million EUR in 2022. The dividend payout amount has remained relatively constant at around 12.6 million EUR since 2018. Comparing free cash flow to the dividend payout, the ratio of dividends covered by cash flow varies widely. For example, in 2022 the ratio is positive but relatively low at 0.06, while in years like 2020, it jumps to an enormously high value of 3.52, which is due to the relatively low dividend payout compared to cash flow. On the contrary, in years with negative cash flow, such as 2023, the ratio is negative (-0.07), indicating that dividends are not well covered by cash flow. Overall, the trend is concerning because the variability and often negative cash flows make it difficult for the dividends to be consistently well-covered by the cash flow, indicating potential issues in long-term dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for VERBIO Vereinigte BioEnergie (VBK.DE) and why it is important to consider

Stability in dividend payments is a critical factor for income-seeking investors, as it ensures a predictable income stream. VERBIO Vereinigte BioEnergie (VBK.DE) has only begun paying dividends consistently since 2016. Prior to that, there were no dividends, which is a significant consideration. Interestingly, from 2016 onwards, the company has shown a steady growth in its dividend payments with values increasing from €0.1 in 2016 to €0.2 in subsequent years. Despite the late start, this trend can be seen as positive for recent years. The dividends have not increased or decreased by more than 20% once the payments commenced, meeting the stability criterion. However, investors should account for the lack of data before 2016 when evaluating the stability. Overall, given the data from 2016 onwards, VBK.DE shows a stable trend, which is good for income-seeking investors.

Dividends Paid for Over 25 Years?

Dividends paid for over 25 years evaluates the consistency and reliability of a company's dividend distributions over an extended period, reflecting its stable financial performance.

VERBIO Vereinigte BioEnergie (VBK.DE) has not met the criterion of paying dividends for over 25 years. According to the data, the company has only been paying dividends since 2017, with a steady increase up to 2023, amounting to six consecutive years of dividends. While the steady increase in dividends per share from €0.10 in 2016 to €0.20 in recent years is a positive indicator of growing profitability and shareholder returns, the fact that the dividend history is limited to just six years falls short of the 25-year benchmark. Consequently, this trend may be seen as unfavorable for investors seeking long-term dividend stability and reliability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases are important to consider as they indicate a company's efforts to return capital to shareholders and potentially enhance share value, reducing the number of shares outstanding.

Examining the share repurchase data for VERBIO Vereinigte BioEnergie (VBK.DE) over the past 20 years reveals mixed signals. It appears that significant repurchased shares occurred in only two years (2009 and 2010). The overall number of shares demonstrates an incremental increase from 63,000,000 in 2008 to 63,430,269 in 2023, indicating a lack of consistent stock buyback programs. This inconsistency, combined with an average repurchase rate of 0.0481, suggests that the company has not focused heavily on returning capital through repurchases. The trend reflects a limited and sporadic approach, which may not be favorable for investors seeking regular and predictable stock buybacks as part of the shareholder value enhancement strategy.