Last update on 2024-06-27

Weyerhaeuser (WY) - Dividend Analysis (Final Score: 4/8)

Comprehensive analysis of Weyerhaeuser (WY) dividend performance with a final score of 4/8. Discover key insights on stability, yield, and growth.

Short Analysis - Dividend Score: 4

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

Weyerhaeuser (WY) is analyzed against 8 criteria to assess its dividend performance and stability, scoring 4 out of 8. Here are the highlights: 1. **Dividend Yield**: WY has a current dividend yield of 4.7742%, higher than the industry average of 3.83%, making it attractive for income-focused investors. 2. **Dividend Growth Rate**: WY shows an average increase of 15.31% over 20 years but with high volatility, raising concerns for steady income. 3. **Average Payout Ratio**: The average is 30.69% over 20 years, usually indicating sustainability, but with significant fluctuations. 4. **Coverage by Earnings**: EPS has fluctuated, showing inconsistent income coverage for dividends. 5. **Coverage by Cash Flow**: Cash flow coverage has been inconsistent, recently improving. 6. **Dividend Stability**: Dividends have not been stable, significant drops noted in tough times (2008, 2020). 7. **Long-Term Payments**: WY has paid dividends for over 25 years, showing resilience. 8. **Stock Repurchases**: Share repurchases over the past 20 years show inconsistency.

Insights for Value Investors Seeking Stable Income

Weyerhaeuser (WY) shows a mixed performance in dividend stability and growth. While a high yield and long-term payment history are positives, volatility in growth rates, inconsistent coverage by earnings and cash flow, and fluctuating dividend payouts suggest potential risks for steady income seekers. It might be worth investigating further if you're considering a higher-yield but riskier dividend stock. For more conservative, stable income, other stocks may be preferable.

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?

How a company’s dividend yield compares to the industry average.

Weyerhaeuser’s (WY) current dividend yield of 4.7742% is notably higher than the industry average of 3.83%. This trend suggests that Weyerhaeuser may be more attractive to income-focused investors. Over the last 20 years, Weyerhaeuser's dividend yield has fluctuated significantly, with a particularly high spike in 2008. Key periods of high yield (over 4% in 2018, 2019, and 2022) contrast with several years of lower yields. The 2023 yield of 4.7742%, coupled with a relatively stable stock price, indicates a solid payout. Given that an above-average yield can be a sign of strong cash flows and a commitment to returning value to shareholders, this trend is favorable. However, potential investors should also consider the company's ability to sustain this yield in different market conditions.

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

The Dividend Growth Rate criterion assesses how the dividend per share has increased annually over a long period, typically 20 years, indicating a company's capability to increase its dividends consistently. This aspect is crucial as it reflects the company’s financial health, profit growth, and future dividend sustainability.

The given data shows significant volatility in Weyerhaeuser’s dividend growth rates over the past 20 years (2003-2023), with several negative and positive spikes. Notably, the years 2009, 2010, 2019, and 2023 exhibit substantial negative growth rates of -75%, -66.67%, -62.5%, and -23.50%, respectively. On the other hand, there are some remarkable positive growth rates such as 200% in 2011, 131.37% in 2021, and 83.90% in 2022. The average dividend ratio over this period is 15.31%, indicating an overall decent growth trend. However, the large fluctuations point to a lack of consistency. In conclusion, while the average dividend ratio is above the 5% threshold, the inconsistency in the rates and significant negative values portrays a volatile dividend growth pattern, which may be concerning for investors seeking steady dividend income. This trend, hence, can be considered as both moderately positive but with high-risk factors due to its volatility.

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

The payout ratio is essential because it shows the proportion of earnings a company pays out as dividends to shareholders. A payout ratio lower than 65% is generally considered sustainable, as it indicates that the company is retaining enough of its earnings to reinvest in its operations, pay down debt, or manage future uncertainties.

Weyerhaeuser's average payout ratio, over the past 20 years, stands at approximately 30.69%. While this would typically be considered a good sign demonstrating conservative and sustainable dividend practices, the individual year figures reveal some significant fluctuations. Notably, there are years when the payout ratio exceeded 100%, suggesting the company paid more in dividends than it earned, likely due to special circumstances or exceptional returns of capital. Moreover, there are years with negative payout ratios, indicating net losses. Consistency is key to dividend sustainability; thus, despite the low average, the high volatility casts a shadow over the overall stability. This implies that dividend reliability could be less predictable for Weyerhaeuser, which might concern income-focused investors.

Dividends Well Covered by Earnings?

how well dividends are covered by earnings per share (EPS) and why it is an important criterion for dividend analysis

The Earnings per Share (EPS) for Weyerhaeuser (WY) has shown significant fluctuations from 2003 to 2023. Highlighting key years: in 2008, the EPS was negative at -2.2267 suggesting financial challenges. However, 2010 marked a sharp spike in profitability reaching 3.9895. Post-2015, except for a slight dip in 2017 and a downturn in 2020, EPS numbers have been generally positive showing profitability. Dividends per share have likewise fluctuated but more moderately. The dividend payout ratio (dividends covered by EPS) frequently drops below 1, notably in 2003, 2016, and 2019, raising concerns. Only 2015 and a few other notable years did the EPS sufficiently cover dividends. This inconsistent trend in dividend coverage suggests room for improvement to ensure that earnings consistently and fully cover payouts. High payout ratios, especially where EPS is negative or insufficient, potentially endanger dividend sustainability. Investors should note this, as reliance on inconsistent earnings may lead to reduced or suspended dividends during tougher years.

Dividends Well Covered by Cash Flow?

Dividend coverage by cash flow examines the proportion of free cash flow used to pay dividends. It indicates the sustainability of dividend payouts.

Between 2003 and 2023, Weyerhaeuser had varying levels of cash flow coverage for its dividends. Positive values indicate well-covered dividends, while negative values in 2007-2009 reveal periods where cash flow was insufficient. Particularly robust coverage is seen in years like 2010 (1.327), 2015 (4.24), and 2023 (1.614). However, inconsistent coverage, notably during economic downturns, suggests potential vulnerabilities. The overall trend shows improvements in recent years, but the inconsistency historically could be a concern for investors seeking stable dividend reliability.

Stable Dividends Since the Company Began Paying Dividends?

The importance of stable dividends for income-seeking investors cannot be overstated. A stable dividend ensures a reliable income stream, critical for those who depend on these payments, such as retirees. Stability also reflects a company's strong financial health and prudent management, acting as a sign of confidence to investors about the ongoing profitability and operational performance of the firm.

Analyzing the dividend per share values for Weyerhaeuser (WY) over the past 20 years, there are notable fluctuations. The significant drop occurred in 2009 when the dividend per share plummeted to $0.6 from $2.4 in 2008, a reduction of 75%. Another minimal drop, but still significant for other years, was seen during the global financial crisis of 2008. In 2020, Weyerhaeuser's dividends dropped from $1.36 in 2019 to $0.51, a sizeable reduction. While the dividends showed strong recovery phases following crises, the volatility may concern income-seeking investors relying on steady payout patterns. Thus, Weyerhaeuser does not align entirely with the stability criteria; however, its recent trends toward recovery and dividend growth could still pique investor interest.

Dividends Paid for Over 25 Years?

Examining if a company has a history of paying dividends for over 25 years is vital for assessing its reliability and commitment to returning value to shareholders.

Weyerhaeuser (WY) has been paying dividends for over 25 years, with some fluctuations during the Great Recession in 2009 and in 2020 due to the COVID-19 pandemic. Despite these downturns, the consistency of dividend payouts reflects a strong commitment to shareholders. For instance, from 1998 to 2008, dividends per share averaged around $1.85. Although there was a drastic cut in dividends during the crises, by 2021, Weyerhaeuser's dividends per share increased significantly to $2.17. Overall, this indicates a decent trend in shareholder returns, demonstrating the company's resilience and reliability in long-term value distribution.

Reliable Stock Repurchases Over the Past 20 Years?

Examining stock repurchases over a long period helps in understanding a company's commitment to returning capital to shareholders and managing its equity structure. This can influence stock prices and indicate management's confidence in its financial health.

The data shows that Weyerhaeuser (WY) engaged in share repurchases in 8 out of the last 20 years. However, the repurchase trend is not consistent. Significant repurchasing activity is observed in some years, particularly in 2007, 2010, and 2015. In 2016, there was an increase in shares, which may be due to stock issuance. Moreover, recent years show relatively lesser shares being repurchased. This inconsistency suggests that while Weyerhaeuser does return capital to shareholders through buybacks, the trend is erratic and may be influenced by external factors such as market conditions or company-specific financial performance. Overall, the average repurchased is about 3.1099, highlighting variability without a clear year-over-year reliability.