Last update on 2024-06-27

Koninklijke Vopak (VPK.AS) - Dividend Analysis (Final Score: 5/8)

Explore our detailed dividend analysis of Koninklijke Vopak (VPK.AS) with a reliable 5/8 final score. Understand the performance and stability of dividends critically with our 8-criteria scoring system.

Short Analysis - Dividend Score: 5

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

Koninklijke Vopak (VPK.AS) received a dividend score of 5 out of 8 based on an evaluation of its performance against several criteria over the past 20 years. The key findings include a consistently high dividend yield compared to industry averages, moderate average annual growth in dividends, and a reasonable payout ratio below 65%. However, the company has shown volatility in earnings and dividend coverage by cash flow, with some years experiencing significant negative values. Dividends have generally been stable with a slight anomaly from 2010 to 2011, and the company has paid dividends for 24 of the last 25 years. Additionally, there has been moderate stock repurchase activity, although it is not consistent year-on-year.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Koninklijke Vopak (VPK.AS) seems to be a reasonably stable dividend-paying company with a strong track record. However, the inconsistency in earnings and cash flow coverage, as well as limited stock repurchases, may pose potential risks. It may be worth considering for dividend-focused investors, but monitoring of financial stability and cash flow trends is recommended. For cautious investors, exploring companies with more consistent performance in these areas might be advisable.

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?

A higher dividend yield indicates that a stock is generating more cash flow for investors through dividends relative to its stock price. It is a critical metric for income-focused investors.

The current dividend yield of 4.2707% is significantly higher than the industry average of 2.78%. Over the past 20 years, Vopak's dividend yield has shown considerable consistency and has generally been higher than the industry average, especially during recent years. This trend is favorable for income investors as it suggests that the company is capable of returning a substantial amount of cash to its shareholders. Moreover, a growing dividend per share from 0.5 in 2003 to 1.3 in 2023 underscores a strong dividend policy.

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

The Dividend Growth Rate indicates how much the dividend paid to shareholders has increased annually on average over a certain period, which in this case is 20 years. A growth rate higher than 5% can signify a healthy, growing company that is generating substantial profits.

Looking at the numbers provided for Koninklijke Vopak (VPK.AS), the dividend per share ratio percentages over the last 20 years are quite varied. There are periods of significant negative growth intermixed with moderate positive growth. For instance, in 2007, the dividend growth ratio spiked to 25%, but we also see a sharp decline to -44% in 2011. The average dividend growth rate over the 20-year span is approximately 5.79%, which just crosses the 5% threshold. However, given the volatility and years of negative growth, this trend does not reflect a consistent, strong dividend growth. Thus, while meeting the 5% criteria as an average, the inconsistencies present risk for dividend-reliant investors.

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

The payout ratio is a financial metric showing the proportion of earnings a company pays to its shareholders in the form of dividends. Lower ratios generally mean more cash is being retained to fuel the company’s growth.

The average payout ratio for Koninklijke Vopak over the past 20 years is around 39.67%, which is well below the 65% threshold. This is a positive indicator as it implies the company has retained a considerable amount of its earnings for reinvestment or other purposes. However, a notable exception is 2022 when the payout ratio was -93.08%, an anomaly that suggests a possible loss situation or extraordinary dividend that year. Overall, having an average payout ratio below 65% over 20 years is a good trend for financial stability and growth potential.

Dividends Well Covered by Earnings?

Dividends well covered by earnings means the Earnings Per Share (EPS) should be significantly higher than the Dividends Per Share (DPS). This is important to ensure the company can comfortably pay dividends without risking financial stability.

The Earnings Per Share (EPS) of Koninklijke Vopak has fluctuated over the years, reaching as high as 4.4736 in 2019 and as low as -1.3429 in 2022. This disparity indicates volatility in earnings. Comparing this to the Dividend Per Share (DPS), which has displayed a more consistent yet gradual increase, one notes a potential risk. Historically, from 2003 to 2023, the ratio of EPS covering DPS varies significantly, with years like 2011 showing only 0.204 coverage and negative coverage in 2022 due to negative EPS. While there were years where DPS was well covered, recent negative figures raise concerns. This trend indicates inconsistency and potential stress on dividend sustainability. Nevertheless, pockets of strong earnings suggest periods of robustness which need to be stabilized for long-term dividend security.

Dividends Well Covered by Cash Flow?

Dividends well-covered by cash flow mean that will probably will continue to pay them in the future with less reliance on external financing or reserves. This also indicates good financial health and management effectiveness, which is a positive signal for investors.

Analyzing Vopak's free cash flow and dividend payout from 2003 to 2023, there are significant fluctuations. Particularly concerning are the negative cash flow years like 2009, 2010, 2011, and 2013, where dividends couldn't be covered by cash flow. Positive coverage ratios are observed in 2012, 2018, 2019, & 2020-2023 which indicate a trend towards better dividend coverage in recent years. However, sustained periods of negative coverage could still be a cautious area for potential investors. The improvement in cash flow coverage in recent years (averaging around 0.9 to 5.1) points towards better financial management, albeit occasional inconsistencies hint at underlying vulnerabilities.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments is crucial because it demonstrates the company's ability to generate consistent earnings and manage its financial resources. For long-term income investors, consistent dividends provide reliable income.

Upon reviewing the dividend payout history of Koninklijke Vopak (VPK.AS) over the past 20 years, it can be observed that dividends have generally either remained steady or increased, reflecting fiscal health and reliable earnings. The single drop seen was between 2010 and 2011, where the dividend per share decreased from €1.25 to €0.7, which is a drop of more than 20%. While this is not ideal, it was an isolated incident. Additionally, the dividends consistently increased post-2011, demonstrating recovery and stability. Despite this, the long-term trend shows a solid dividend history outside of the 2010-2011 anomaly.

Dividends Paid for Over 25 Years?

The consistency of dividend payments over a long period is critical as it shows a company's commitment to returning capital to shareholders.

Koninklijke Vopak has paid dividends for 24 out of the last 25 years, demonstrating a strong commitment to shareholders. However, the year 2002 is an outlier where no dividend was paid. This single gap may raise concerns for some investors, but the overall trend shows resilience and reliability in rewarding shareholders. This trend is generally good for investors looking for steady income and shows confidence in long-term financial stability.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Koninklijke Vopak (VPK.AS) and why it is important to consider

The trend of reliable stock repurchases over the past 20 years is an important measure of a company's commitment to returning value to shareholders. Share repurchases can indicate that the company believes its shares are undervalued, and it can also serve to increase the value of remaining shares by reducing the total number of shares outstanding. However, consistency in stock repurchases also reflects sound financial health and management's confidence in future earnings. Let's examine how Vopak has fared in this area: The number of shares has gradually increased from 116,626,750 in 2003 to a peak of 127,782,646 in 2018, followed by a slight decline. Notable repurchased years include 2008, 2011, 2016, 2017, 2019, 2020, 2021, and 2022. This indicates an average repurchase rate of 0.374 over the past 20 years. However, these repurchases were relatively limited compared to the overall changes in share numbers. To interpret this critically, while there is some evidence of repurchasing activity suggesting some shareholder value return, the limited impact and lack of consistency year-on-year makes the trend slightly less favorable compared to companies with more aggressive and consistent buyback programs.