Last update on 2024-06-28

Credit Agricole (XCA.DE) - Dividend Analysis (Final Score: 4/8)

Comprehensive analysis of Credit Agricole's (XCA.DE) dividend policy and performance, evaluating criteria like coverage, payout ratio, stability, and growth.

Short Analysis - Dividend Score: 4

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

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 is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It's a key metric for investors looking for income-generating equities. Compared to the industry, a higher dividend yield can indicate a company is returning more value to shareholders.

As of 2023, Crédit Agricole has a dividend yield of 8.1585%, significantly higher than the industry average of 2.76%. Historically, Crédit Agricole's yield has fluctuated: it peaked in 2008 at 14.9744% and hit notable values like 10.4418% in 2011 and 10.6599% in 2021. The higher yield could be attractive to dividend investors, suggesting the company is providing substantial returns compared to peers. However, the fluctuation may also reflect underlying volatility in earnings and stock price. Over the last 20 years, the industry average has remained more stable, mostly hovering between 1.67% and 4.48%, suggesting that Crédit Agricole's higher yields may come with higher risks. Given the recent yield and historical volatility, the trend could be both appealing and cautionary, requiring investors to weigh the benefits against the risks.

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

The dividend growth rate is a measure of the percentage growth of a company's dividend over a specific period. A growth rate higher than 5% typically indicates that the company is generating increasing profits and is returning a portion of these profits to shareholders as dividends. This is considered favorable by investors seeking income growth from their investments.

Analyzing Credit Agricole's dividend growth rate over the past 20 years, it is evident that the dividend has not been consistent. The values show frequent fluctuations, with several years showing negative or zero dividend per share ratios, indicative of times when no dividends were paid or they were even negative, such as in 2009 and 2020. Only a few years, notably 2017 and 2018, show significant positive ratio increases. This overall instability reflects a lack of steady dividend growth, hence suggesting potential reliability issues for income-seeking investors. Given these fluctuations, the average dividend ratio of -7.98% indicates an overall decline over two decades, underscoring the poor performance in dividend growth. Therefore, Credit Agricole does not meet the criterion of having a dividend growth rate higher than 5%, suggesting a negative trend for dividend-seeking investors.

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

The payout ratio is the proportion of earnings paid out as dividends to shareholders. Keeping it below 65% is crucial as it indicates the company retains a good portion of its earnings to reinvest in the business or pay down debt.

The data on Credit Agricole (XCA.DE)'s payout ratio over the last 20 years indicates solid financial management in terms of dividend payouts. From 2003 to 2023, the average payout ratio is approximately 6.34%, which is well below the 65% threshold. Notably, periods like 2003 to 2007 and several years through 2020 showcase a 0% payout, reflecting either financial conservation or perhaps no dividend payouts. In higher payout periods, such as 2019 with 40.93% and 2021 with 59.15%, they still lie comfortably beneath the 65% ceiling. This suggests a consistent strategy of retaining earnings for reinvestment or other financial initiatives. Hence, the trend here is favorable for this financial criterion, indicating a conservative and prudent approach to maintaining financial health while ensuring shareholder returns.

Dividends Well Covered by Earnings?

Dividends being well covered by the earnings indicate the company's ability to sustain its dividend payments without straining its financial health.

Analyzing the data for Credit Agricole (XCA.DE), we see that the coverage ratios fluctuate widely over the years, often dropping to 0%. This suggests periods where earnings were not sufficient to cover dividends. For instance, in 2008, 2012, and 2020, the earnings did not cover dividends at all. However, in 2019 and 2022, the coverage ratios were significantly higher at 0.409 and 0.591 respectively. These ratios, though improvements, still indicate that the dividends are not conservatively covered by earnings. In general, a coverage ratio significantly above 1 is considered healthy. Overall, the trend for Credit Agricole shows suboptimal coverage, pointing to a pattern where dividend sustainability may not be robust. This is a relatively bad trend for the given criteria, suggesting potential stress in maintaining dividend payouts consistently.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that a company's dividend payments are adequately supported by its cash flow from operations. It's essential as it reflects sustainability.

Credit Agricole's cash flow coverage of its dividends has been highly volatile, with significant negative values in certain years (e.g., in 2023 with -0.0926). In contrast, some years show exceptionally high coverage ratios, such as 2022 with 7.6627. The inconsistent coverage from year to year makes it challenging to rely on a stable dividend payout, making this trend concerning. Moreover, the drastic negative values in several years highlight potential liquidity issues, raising alarms about the company's ability to maintain future dividends without affecting financial stability.

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.

Credit Agricole's (XCA.DE) dividend payments have shown considerable fluctuations over the past 20 years. Notably, there are years such as 2008, 2009, and 2010 where dividends were reintroduced after a period of zero payouts. Detailed numbers reveal a dividend per share of 1.1021 in 2008 dropped to 0.4133 in 2009, which is more than a 60% decline. Similarly, payouts were zero in the years 2011, 2012, and again in 2020, indicating instability. There have been also sudden increases like from 0.69 in 2019 to 1.05 in 2022. Given this information, it is clear the dividend per share has dropped by more than 20% on multiple occasions. Importantly, the company had periods without paying any dividends. For income-seeking investors who desire consistency, this trend is concerning as it shows instability instead of gradual growth or even steady payouts.

Dividends Paid for Over 25 Years?

One criterion for evaluating dividend reliability and shareholder friendliness is whether a company has consistently paid dividends for over 25 years. Extended periods of dividend payments signal financial stability and commitment to returning value to shareholders.

Credit Agricole has paid dividends since 2008, with values ranging from €0 to €1.05 per share. However, there were several years with zero dividends, notably 2008, 2012-2013, and 2020. This trend shows inconsistency in dividend payments, raising concerns about the company's ability to provide reliable dividends. While periods of zero payouts might be influenced by economic downturns or internal challenges, this track record could be unsettling for long-term dividend-focused investors. Hence, Credit Agricole does not meet the criterion of paying dividends for over 25 years, which can be seen as a negative point for those prioritizing dividend consistency and reliability.

Reliable Stock Repurchases Over the Past 20 Years?

Stock repurchases, also known as buybacks, are when a company buys back its own shares from the marketplace. This can be a way to return money to shareholders, potentially increase the value of remaining shares, and signal management’s confidence in the company’s future.

Over the past 20 years, Credit Agricole (XCA.DE) has exhibited a sporadic approach to stock repurchases. The company repurchased shares in years such as 2007, 2009, 2010, 2011, 2015, 2017, 2018, 2022, and 2023. It is clear from these repurchase years that there isn’t a consistent annual program, which might indicate a more opportunistic or strategic approach rather than a reliable one. The average number of shares repurchased per year over the last two decades stands at 1932.5. However, upon evaluating the actual numbers, it appears that the company significantly ramped up its repurchasing activities in the year 2019 with a repurchase count of 2.87 billion, and 2020 followed closely with 2.88 billion. This action skews the average repurchased shares, overshadowed by the enormous repurchases in the latter years. Therefore, while there are signs of substantial repurchase activity in the recent few years, historically, this activity has not been stable or reliable on a consistent basis, indicating a need for investors to critically evaluate the motives and future outlook of such repurchasing strategies by the management. This trend can be viewed as somewhat erratic, and might not fully satisfy investors looking for stable and consistent buyback policies.