Last update on 2024-06-27

Vossloh (VOS.DE) - Dividend Analysis (Final Score: 5/8)

Analyze Vossloh (VOS.DE) dividend policy performance. Get insights into dividend yield, growth, stability, and historical payout. Final score: 5/8.

Short Analysis - Dividend Score: 5

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

Vossloh, under an 8-criteria analysis system, has shown both strengths and weaknesses in its dividend policies. It boasts a dividend yield that is higher than the industry average at 2.3838%, suggesting a strong commitment to delivering shareholder value. On average, its payout ratio of 43.57% is well below the 65% benchmark, indicating sustainable dividend payments under usual circumstances. However, Vossloh's dividend growth is worryingly fluctuating, with an overall negative trend of approximately -4.92%. Its dividend coverage by earnings and cash flows also presents an inconsistent picture. While some years show good coverage, others reveal concerning gaps, hinting at periods of financial stress. Further, stability in dividend payments is mixed, with Vossloh halting dividends completely from 2015 to 2017, undermining long-term consistency. Additionally, the company's history of paying dividends for less than 25 years reflects volatility in financial performance. Stock repurchases have been irregular, signifying a lack of a firm commitment to shareholder value through this channel.

Insights for Value Investors Seeking Stable Income

Given Vossloh's mixed performance in dividend stability and growth, potential investors should exercise caution. While the company shows a propensity to deliver high yields, the inconsistency in its dividend payments and growth, along with fluctuating earnings coverage, may signal underlying financial volatility. Interested investors should conduct a deeper investigation into Vossloh’s financial health, focusing on the reasons behind such inconsistencies. If you are looking for steady and reliable dividend income, Vossloh may not be the most dependable choice. However, for those willing to take on more risk, its periods of high dividend yield could be attractive.

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 dividend income investors receive relative to the stock price.

Vossloh's current dividend yield of 2.3838% significantly surpasses the industry average of 1.47%. Analyzing historical data, Vossloh has demonstrated a consistent ability to provide above-industry-average yields, barring a few years when dividends were suspended. This higher yield suggests that Vossloh is committed to returning value to shareholders, which is a positive signal for income-focused investors.

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

The Dividend Growth Rate shows how much a company's dividend payments have increased (or decreased) over a specific period, reflecting the financial health and management's confidence in future earnings. It is calculated as a percentage growth per year over the given period.

Based on the data provided, Vossloh (VOS.DE) has shown substantial fluctuation in its dividend payments over the past 20 years. Though there are positive spikes (60% in 2003, 30.77% in 2008, etc.), the negative ratios (-100% in 2015, -75% in 2014) significantly harm the average. The average dividend ratio is approximately -4.92%. Hence, there is no consistent positive growth rate, showing a volatile and generally declining trend. This is unfavorable for investors looking for a stable and growing dividend income.

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

Average Payout Ratio lower than 65% in the last 20 years. It indicates the company's ability to maintain its dividends within earnings capacity.

The average payout ratio for Vossloh (VOS.DE) over the last 20 years has been approximately 43.57%. This is significantly lower than the threshold of 65%, which indicates that Vossloh has, on average, comfortably managed to maintain its dividend payouts within its earnings. Having a payout ratio lower than 65% is generally good as it suggests that the company is not overextending itself to pay dividends. There are, however, notable outliers in certain years such as 2006, 2014, 2018, 2020, which saw payout ratios exceeding 100%, indicating that the company had to dip into reserves or use debt to maintain dividend payouts in those years, potentially signaling financial stress during those periods. Additionally, there's a peculiar observation of negative payout ratios in 2014, 2016, and 2019, which implies the company reported negative earnings, raising concerns, although these years are exceptions rather than the rule.

Dividends Well Covered by Earnings?

When analyzing dividends, it is crucial to ensure they are well covered by the company's earnings. This implies that the firm generates sufficient net profit to pay its shareholders without compromising its financial stability.

Examining Vossloh’s historical data from 2003 to 2023, we observe fluctuating coverage of dividends by earnings. Particularly, in years like 2005, 2010, and 2018, dividends were well-covered with ratios exceeding 0.9, suggesting stability during those periods. However, significant concerns arise in years like 2014, 2016, and 2019, where earnings per share were negative or the coverage was 0, indicating the firm either did not distribute or could not sustain dividends with its earnings. This inconsistency could be worrisome for long-term investors relying on stable dividend income. Such erratic dividend coverage may hint at potential volatility in the company’s profitability and should prompt investors to assess the underlying causes, perhaps related to operational challenges or sector-specific issues. A stable and positive trend in earnings covering dividends is highly desired, but Vossloh’s inconsistent performance in this realm suggests caution.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicate the company's ability to sustain dividend payments from its operational cash flows, ensuring they are not relying heavily on external financing.

In analyzing Vossloh's dividend coverage by free cash flow from 2003 to 2023, we observe significant variability. Good coverage ratios, such as in 2009 (8.5) and 2020 (1.024), suggest dividends were well-supported by cash flow. However, negative values in multiple years like 2003 (-1.56), 2013 (-0.156), and 2017 (-0.412), indicate that dividends exceeded cash flows, either due to operational challenges or external financing needs. Such trends can be worrisome for dividend sustainability. While recent years have shown improvement (0.99 in 2022), consistent positive coverage is crucial for long-term reliability.

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.

Over the past 20 years, Vossloh's (VOS.DE) dividend per share has fluctuated significantly. For income-seeking investors, the fact that Vossloh did not pay any dividends from 2015 to 2017 could be particularly concerning. Despite recovery to a dividend per share of 2 EUR in 2018, the subsequent drop to 1 EUR indicates a lack of stability. While the overall trend shows occasional high dividends, the inconsistencies and especially the years with zero dividends undermine the stability criterion necessary for more conservative income investors.

Dividends Paid for Over 25 Years?

Criterion 6 examines whether a company has consistently paid dividends over 25 years. This consistency is crucial as it indicates financial stability and a commitment to returning value to shareholders.

From 2000 to 2023, Vossloh has not maintained an unbroken streak of dividend payments. In 2015, the company paid no dividend, which was also the case in 2016 and 2017. Post-2017, dividends returned but were lower compared to earlier years. Despite these interruptions, the history of fluctuating dividend payments suggests some volatility in financial performance. The lack of dividends for three consecutive years reflects poorly in terms of long-term reliability. Additionally, dividend reductions from 2 EUR in 2008 to 1 EUR in recent years further imply instabilities. This inconsistency represents a negative trend for long-term income-focused investors who prioritize steady and reliable dividend streams.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluate the trend of stock repurchases by Vossloh in the past 20 years based on their share count. Discuss the significance of these repurchases in relation to financial performance and shareholder value.

Vossloh's share count over the past 20 years displays a complex pattern of issuance and repurchase activities. The years 2008 to 2012 and 2023 show reliable stock repurchases, whereas other years indicate share issuances or stability. Notably, in 2009, the share count decreased significantly from 15,157,694 to 13,794,556, around a 9% reduction. The year 2023 shows a drop to zero, indicating either a significant buyback decision or data irregularity which needs further verification. The average repurchase rate of -4.0844 highlights overall more share issuance than repurchase. While repurchasing shares can indicate strong cash flow and return of value to shareholders, the inconsistency in repurchases alongside increased share counts in multiple years suggests a mixed approach toward managing share count. The intermittent repurchasing might reflect strategic financial maneuvers or responses to market conditions.