Last update on 2024-06-27

Wintrust Financial (WTFC) - Dividend Analysis (Final Score: 4/8)

Comprehensive dividend analysis of Wintrust Financial (WTFC), evaluating 8 criteria for performance and stability. Final score: 4/8.

Short Analysis - Dividend Score: 4

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

Dividend Analysis for Wintrust Financial (WTFC) has been evaluated using an 8-criteria scoring system. The company has a dividend yield lower than the industry average, fluctuating over 20 years. Positive indicators include an average annual growth rate of 19.51% and an average payout ratio of 22.53%, well below the 65% threshold, suggesting sustainability. Dividends are well-covered by earnings, with consistently high EPS compared to DPS. The payout history is stable, with the company paying dividends since 2000 but buybacks are inconsistent, with more issuance than repurchases lately.

Insights for Value Investors Seeking Stable Income

Considering the low dividend yield relative to industry and inconsistent stock buybacks, prospective investors may want to exercise caution. However, the strong growth rate, low payout ratio, and earnings coverage suggest potential for sustainable dividends. Thus, WTFC could be worth exploring further, but it doesn't stand out as a top pick for dividend-focused investors.

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 relative to the stock price, essential for income-focused investors.

When analyzing Wintrust Financial's (WTFC) dividend yield in comparison to the industry average, we observe that WTFC's 1.7251% yield underperforms the industry average of 2.76%. Over the past 20 years, WTFC's dividend yield has fluctuated, occasionally above the industry average but often below. High points, such as 2020's 3.7153%, contrast with lows like 2003's 0.3548%. Concurrently, WTFC's stock price steadiness suggests consistent company performance. Despite recent gains in dividend per share—indicative of ongoing payouts—the lower yield remains a concern given industry standards. Thus, when seeking higher dividend returns, investors might reconsider WTFC given its historical yield trend and current underperformance relative to industry norms.

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

The Dividend Growth Rate is a measure to determine if the annual dividends paid by a company have increased over time. Evaluating it over a 20-year period provides insight into long-term trends.

The Dividend Growth Rate for Wintrust Financial (WTFC) over the last 20 years shows variations with some years experiencing declines, particularly in 2009, 2010, and 2023. Despite these fluctuations, an average dividend growth of approximately 19.51% is noted. A target of greater than 5% over a long horizon typically indicates a strong and increasing ability to reward shareholders, thus the observed average surpasses the threshold, which is a positive indication. However, the negative growth years highlight some potential volatility or events affecting payouts. Overall, this trend is good but has some cyclical disruptions.

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

The Average Payout Ratio assesses a company's ability to sustain its dividend payments over time.

From 2003 to 2023, Wintrust Financial (WTFC) has maintained an Average Payout Ratio of approximately 22.53%, which is substantially below the 65% threshold. This low ratio generally suggests that the company retains a significant portion of its earnings for growth or debt repayment while providing shareholders with dividends. The year 2008 stands out with a payout ratio of over 100%, which was an anomaly likely due to the financial crisis. Such a consistently low payout ratio is favorable, indicating financial prudence and sustainability of dividend payments. Overall, this trend is good for Wintrust Financial.

Dividends Well Covered by Earnings?

This criterion assesses whether the company's dividends are adequately covered by its earnings, which is critical for ensuring sustainability of dividend payments.

Wintrust Financial's trend in Earnings per Share (EPS) compared to Dividends per Share (DPS) coverage from 2003 to 2023 shows that the EPS consistently far exceeds the DPS. For instance, in 2023, the EPS was $10.1821 while the DPS was $1.6, giving a coverage ratio of approximately 0.157, indicating that earnings cover dividends multiple times over. Except in 2008, when the coverage ratio was abnormally high due to low earnings, the trend generally remains positive. Such a strong coverage ratio suggests that Wintrust Financial is not only capable of sustaining its dividend payments but potentially increasing them. This is a very favorable trend.

Dividends Well Covered by Cash Flow?

Explain the criterion for Wintrust Financial (WTFC) and why it is important to consider

Short-term fluctuations in free cash flow and changing dividend payouts impact how well dividends are covered by free cash flow. If the free cash flow exceeds the dividend payouts, dividends are considered well covered, indicating financial robustness.

Stable Dividends Since the Company Began Paying Dividends?

criterion for Wintrust Financial (WTFC) and why it is important to consider

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of paramount importance for income-seeking investors.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years is a criterion that looks at the consistency of a company's dividend distribution over an extended period. This is important as it indicates financial stability and long-term shareholder value.

Wintrust Financial (WTFC) has a commendable record of paying dividends over the listed years, beginning in 2000. The trend shows an initial phase with modest dividends per share oscillating slightly, followed by significant growth. This consistency and growth, despite a minor dip in 2021, suggest financial stability and a strong commitment to shareholder returns. The data indicates reliability in dividend distribution, which is a positive signal for long-term investors, implying confidence in the company's sustainable earnings and cash flows.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years evaluates if the company has consistently bought back its shares over a long period, stabilizing or reducing the per-share value, thereby benefiting shareholders. More reliable buybacks infer management's confidence in the company's value.

Examining Wintrust Financial (WTFC), the number of shares outstanding has varied significantly over the past 20 years. Interestingly, notable buybacks occurred in 2010, 2019, and 2021. However, the overall average change in the number of shares over this period is 1.0107, indicating a slight net issuance rather than consistent buybacks. The substantial increase in shares in 2009 was probably due to new capital issuance amid the global financial crisis. Thus, Wintrust has not shown a strong, consistent trend of stock repurchases over the last two decades, which may disappoint investors seeking regular buybacks as a sign of robust financial health and confidence from the company’s management. The trend is mixed and leans towards more issuance than buyback.