AIR.DE 132.2 (-0.27%)
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Last update on 2024-06-27

Airbus (AIR.DE) - Dividend Analysis (Final Score: 4/8)

Get an in-depth dividend analysis of Airbus (AIR.DE), evaluating the performance and stability with an 8-criteria scoring system. Final Score: 4/8.

Knowledge hint:
The dividend analysis assesses the performance and stability of Airbus (AIR.DE) dividend policy using a 8-criteria scoring system.
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Short Analysis - Dividend Score: 4

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

Criteria
Dividend Yield Higher than the Industry Average?
1
Average annual Growth Rate higher than 5% in the last 20 years?
0
Average annual Payout Ratio lower than 65% in the last 20 years?
0
Dividends Well Covered by Earnings?
1
Dividends Well Covered by Cash Flow?
1
Stable Dividends Since the Company Began Paying Dividends?
0
Dividends Paid for Over 25 Years?
0
Reliable Stock Repurchases Over the Past 20 Years?
1

The analysis of Airbus (AIR.DE)'s dividend policy reveals a mixed bag. The company's current dividend yield of 1.285% is higher than the industry average of 1.16%, which is a positive sign. However, the average annual growth rate over the last 20 years is negative at -2.63%, showing inconsistency. The payout ratio is significantly higher than the recommended 65%, averaging at 290.34%, which indicates an unsustainable payout policy. While there are years with good dividend coverage from earnings, many years show significant shortfalls, indicating inconsistency. The dividends being well-covered by cash flow and the stability in payments (except for 2020 due to COVID-19) are seen as stabilizing factors. Over a 25-year history, there was one year with no dividends (2020), which raises some concerns but is understandable given the pandemic. Airbus has had sporadic stock repurchases, indicating that buybacks are not a consistent strategy for the company.

Insights for Value Investors Seeking Stable Income

Investors should approach Airbus (AIR.DE) with caution when considering it for steady dividend income. While the current dividend yield is slightly higher than the industry average and the company has returned to paying dividends post-2020, inconsistencies in dividend growth rate, payout ratio, and dividend coverage present potential risks. Given these factors, Airbus might be more suitable for investors looking for growth potential and capital appreciation rather than those focused solely on consistent and reliable dividend income.

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 for Airbus and why it is important.

Historical Dividend Yield of Airbus (AIR.DE) in comparison to the industry average

The current dividend yield for Airbus (AIR.DE) stands at 1.285%, exceeding the industry average of 1.16%. Historically, the dividend yield for Airbus has shown significant volatility, with peaks and troughs over the past 20 years. For instance, in 2003, the yield was extraordinarily high at 20.2094%, followed by another peak in 2004 at 25.8725%. In recent years, the yield has normalized significantly, hovering closer to the industry average since 2018. This trend suggests that the company is perhaps focusing more on reinvestment and growth strategies rather than high dividend payouts. While its current yield is above the industry average, this modest difference indicates a balanced approach between rewarding shareholders and investing back into the company. Importantly, the dividend per share has varied considerably, impacted also by significant fluctuations in the stock price. The COVID-19 pandemic saw Airbus halt dividends altogether in 2020, but it resumed in subsequent years. The recent dividend yield of 1.285% is a good sign, indicating that Airbus is returning to a stable dividend policy in line with the industry, which is favorable for investors seeking some income along with potential capital appreciation.

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

Assessing the Dividend Growth Rate over a prolonged period, such as 20 years, provides insight into a company's dividend stability and its ability to grow shareholder returns consistently. A growth rate exceeding 5% is generally considered healthy and indicative of strong financial health.

Dividend Growth Rate of Airbus (AIR.DE)

Based on the provided Dividend Ratios, Airbus's dividend growth rate shows considerable fluctuations over the past 20 years, registering a notably negative average value of -2.63%. Key observations include drastic changes, such as -100% in 2021 and significant positive growth like 118.67% in 2011. These fluctuations suggest inconsistency in dividend payouts, likely influenced by external factors such as economic conditions and company-specific challenges. With such variability, Airbus has not achieved a stable, high dividend growth rate exceeding 5%; thus, this trend is currently unfavorable regarding the given criterion.

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

The payout ratio represents the proportion of earnings a company pays to its shareholders in the form of dividends. A lower payout ratio (typically under 65%) is generally considered sustainable, indicating that a company is retaining enough earnings for growth and operations.

Dividends Payout Ratio of Airbus (AIR.DE)

The average payout ratio for Airbus over the last 20 years is 290.34%, significantly higher than the recommended 65%. This trend is concerning because it suggests that Airbus has been paying out more in dividends than it earns, leading to an unsustainable dividend policy. In some years, the payout ratio is even negative or extremely high, reflecting periods of financial distress or loss. This pattern raises red flags for potential investors looking for a stable and reliable dividend income.

Dividends Well Covered by Earnings?

Dividends should be covered well by earnings to ensure that the company isn't stretching its resources to pay shareholders at the expense of reinvesting or maintaining operations.

Historical coverage of Dividends by Earnings of Airbus (AIR.DE)

Examining Airbus’s record on covering dividends with earnings, it is clear that the company has had a highly volatile ride. For a healthy financial standing, a company typically should have an EPS covering dividends at least 2 times. However, Airbus shows varied results across different years. For instance, in 2003, the EPS to Dividends coverage ratio is a stellar 14.18 times, but it drastically dips to negative values in years like 2009 (-2.64) and 2017 (-0.94), indicating a substantial period where the company’s payout exceeded its earnings. Negative values, particularly like in 2021 (-1.24), highlight instances where Airbus lacked sufficient earnings to cover any dividends, resulting in a zero payout that year. Years like 2023 showed very low coverage at around 0.37 times, reflecting a potential financial strain or strategic decision for lower shareholder returns. In this context, while there are years Airbus outperformed with a good cover ratio, numerous years fell below the healthy benchmark. This inconsistency suggests a certain level of financial instability or strategic changes affecting dividend reliability. Such a trend can be perceived as concerning for investors who prioritize steady dividend income, labeling this criterion as generally unfavorable for Airbus.

Dividends Well Covered by Cash Flow?

Explain the criterion for Airbus (AIR.DE) and why it is important to consider

Historical coverage of Dividends by Cashflow of Airbus (AIR.DE)

Dividends being well-covered by cash flow implies that the company generates sufficient free cash flow to comfortably pay dividends. This is vital because reliable dividend payments are a sign of financial health and stability. A company that can consistently cover its dividends with cash flow is less likely to resort to debt or asset sales to meet its obligations, making it more attractive to dividend-focused investors.

Stable Dividends Since the Company Began Paying Dividends?

Explain why stable dividends over the past 20 years are crucial for Airbus

Historical Dividends per Share of Airbus (AIR.DE)

A long history of stable or growing dividends is often seen as a mark of confidence by income-focused investors. Stability in dividend payments suggests a company that possesses strong cash flow management and financial health. For Airbus, consistent dividends over the last 20 years without more than a 20% drop are crucial. Airbus's dividend history demonstrates stability in all years but one, notably 2020 due to the COVID-19 pandemic. This is a specific context and may not indicate long-term weakness. Maintained stability post-2020 is a positive sign for investors.

Dividends Paid for Over 25 Years?

Evaluate whether Airbus has paid dividends consistently over the last 25 years and why this consistency or lack thereof is significant for investors.

Historical Dividends per Share of Airbus (AIR.DE)

The dividend history of Airbus over the past 25 years shows a variable dividend per share ranging from EUR 2.4 in 1999 to EUR 1.8 in 2023. The year 2020 stands out when the company did not pay any dividends. The consistency of dividends is a measure of a company's stable financial health and its commitment to return profits to shareholders. The no-dividend year in 2020 coincides likely with the global COVID-19 pandemic, which impacted aviation significantly. This inconsistency, especially considering the strong history, might raise concerns among investors about the dependability of future dividends, despite the resumption in subsequent years.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate that a company is willing to return capital to shareholders, typically signifying strong cash flow and a commitment to maximizing shareholder value. It also implies that the management has confidence in the company's future prospects and that they believe the company's stock is undervalued.

Historical Number of Shares of Airbus (AIR.DE)

Analyzing the trend in the number of shares over the past 20 years for Airbus (AIR.DE), we observe that the number of shares has mostly increased or remained stable over the given timeline. Despite the overall growth in share count, there are a few specific years where reliable share repurchases occurred - notably in 2005, 2013, 2014, 2016, and 2017. These sporadic repurchases contribute to an average decrease in share count of -0.0728 over the 20-year period, indicating that while Airbus has engaged in stock repurchase programs occasionally, it is not a consistent trend. This sporadic repurchasing might signal occasional surplus financial resources or other strategic motives behind buybacks. On the whole, the minimal reduction in share count (-0.0728 average) suggests that while the company does sometimes return capital to shareholders through buybacks, it is not a primary or reliable strategy over the long term. This inconsistent approach can be seen as slightly unfavorable if assessed purely on the criterion of 'reliable' stock repurchases.


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