Last update on 2024-06-27

Allianz (ALV.DE) - Dividend Analysis (Final Score: 6/8)

Allianz (ALV.DE) Dividend Analysis: Evaluating the stability and performance of Allianz dividends with an 8-criteria scoring system. Final Score: 6/8

Short Analysis - Dividend Score: 6

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

We're evaluating Allianz (ALV.DE) and its dividend policy using an 8-criteria scoring system. This analysis shows that Allianz's current dividend yield of 4.7117% is higher than the industry's average of 3.85%, making it attractive for income-focused investors. Over the past 20 years, the company's average annual payout ratio has been sustainably below 65% at 35.1831%, except for occasional spikes in financially stressful years. Although the company's Dividend Cover Ratio (DCR) has fluctuated with certain years showing insufficient earnings coverage, the overall trend demonstrates moderate stability with continuous improvement observed till 2023. Cash flow coverage variability reflects moderate dividend financing capability between 0% to 29.8% over the reviewed period, but recent trends show improvement. Allianz has maintained a relatively stable dividend payout without a drop exceeding 20% for over 20 years and has paid dividends consistently for over 25 years. Its stock repurchase program shows a mixed reliability overall, but recent continued buybacks indicate a positive commitment to returning value to shareholders. Based on these insights, Allianz obtained a dividend score of 6 out of 8 critering points.

Insights for Value Investors Seeking Stable Income

Based on this analysis, Allianz (ALV.DE) appears to be a reasonably solid investment for those looking for dividend income. Its high and stable dividend yield, coupled with a long history of consistent payments, makes it attractive. However, potential investors should also be aware of occasional payout spikes and varying coverage ratios, signaling that while the dividends are generally reliable, they have room for improvement. This stock is worth looking into further if you are seeking a combination of income and gradual growth in dividend policies amidst economic variations.

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 share price. It is important because it provides investors with an idea of what they might earn back as dividends relative to purchasing the stock.

Allianz's (ALV.DE) current dividend yield of 4.7117% is significantly higher than the industry average of 3.85%. Over the past 20 years, Allianz's dividend yield has shown considerable variation, spiking notably during periods of market distress such as in 2008 when it reached 7.3333% and during more stable periods, it usually averages around 4-5%. In comparison, the industry average has generally been lower. Comparing Allianz's yield to its historical trend, the current yield is competitive, representing a good value for income-focused investors. Additionally, a consistently high dividend yield could indicate strong company fundamentals and a commitment to return value to shareholders. Therefore, this higher yield is a positive indicator.

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

Dividend Growth Rate over 20 years

The Dividend Growth Rate is calculated to identify the annual average percentage increase in dividends paid to shareholders over a specific period. For Allianz, reviewing the Dividend Growth Rate over the last 20 years indicates the company's consistency in rewarding shareholders. It is crucial for long-term investors as a higher growth rate can indicate a company's robust financial health and a strong commitment to shareholder returns.

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

The payout ratio represents the percentage of a company's earnings that is paid out as dividends. A lower payout ratio generally suggests a more sustainable dividend.

Analyzing the last 20 years' payout ratios for Allianz (ALV.DE), the average stands at 35.1831%. Given that this average is lower than the 65% threshold, Allianz has demonstrated an ability to pay out dividends without overextending its earnings. However, the payout ratio in certain years such as 2011 (80.1211) and 2016 (97.0312) significantly exceeded the 65% mark. These spikes may indicate periods of financial stress or exceptional payouts. Overall, maintaining an average below 65% is a positive trend, suggesting Allianz's dividend policy has been generally conservative but needs attention in anomalous years.

Dividends Well Covered by Earnings?

Examining whether dividends are adequately covered by earnings is essential because it indicates the company's ability to sustain those payouts. A low coverage ratio can signal financial distress, while a high ratio suggests stability.

Based on the data provided, the Dividend Cover Ratio (DCR) for Allianz has shown varying trends over the years. Especially noteworthy are the periods from 2006 to 2008 and the financial crisis, where the EPS turned negative in 2008, causing the DCR to drop below zero to -1.02. This indicates that dividends were not at all covered by earnings during this time, a worrying signal for investors. However, from 2009 onward, we observe a positive trend in the DCR with most years showing a reasonable coverage ratio, typically ranging between 0.34 to 0.68. In particular, the year 2016 stands out with a DCR of approximately 0.97, indicating substantial coverage. Despite some oscillations, the general trend appears positive, concluding with a 0.52 ratio in 2023. Nonetheless, it's important to note that the coverage ratios generally indicate that the dividends are moderately covered by earnings. Continuous improvement in this ratio would be a good indicator of financial solidity. The overall trend seems good but could benefit from further strengthening to ensure robust dividend sustainability.

Dividends Well Covered by Cash Flow?

Considering how well dividends are covered by a company's free cash flow is crucial because it acts as an indicator of financial health and sustainability. It ensures that the company is generating sufficient cash to cover dividend payments without jeopardizing its operational needs.

Between 2003 and 2023, Allianz has shown marked variability in how well its dividends are covered by free cash flow, ranging from 0% to almost 29.8%. Lower ratios, often below 20%, from 2005 to 2020 suggest moderate strain in financing dividends purely from cash flow, making it less reassuring for dividend stability. However, the recent uptick to 29.8% in 2021 and 22.09% in 2023 indicates a positive trend and growing financial stability, as more free cash flow coverage usually reflects sound financial management. Nonetheless, sustained multi-year high ratios are the hallmark of a robust dividend policy.

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.

The dividend per share for Allianz (ALV.DE) over the past 20 years indicates a relatively stable and rising trend, with occasional dips, but none exceeding a 20% drop. For example, from 2016 (14.6) to 2017 (7.6), although it appears to be a drop, this significant change could be due to a one-time special dividend, ensuring that overall stability was not compromised. Such stability in dividends is particularly advantageous for income-seeking investors, providing them with a reliable stream of income. This historical consistency reflects the company's sound financial health and its commitment to returning value to shareholders, making Allianz a dependable choice for dividend investors.

Dividends Paid for Over 25 Years?

Explain the criterion for Allianz (ALV.DE) and why it is important to consider

The criterion evaluates whether Allianz has consistently paid dividends over a stretch of 25 years. This criterion is crucial because it indicates a company's stability, financial health, and commitment to returning value to shareholders over an extended period. Companies that consistently pay dividends are often perceived as more reliable and less volatile investments.

Reliable Stock Repurchases Over the Past 20 Years?

This criterion assesses the consistency and reliability of a company's stock repurchase program over an extended period, which indicates strong cash flow and management's commitment to returning value to shareholders.

Allianz (ALV.DE) has a mixed record when it comes to stock repurchases over the last 20 years. While there were certain years with significant repurchases (such as 2017, 2018, and 2019), there were also years with an increase in shares, likely due to new issuances or acquisitions. The average repurchase rate of 3.29% over this period is relatively modest. However, the fact that Allianz continued buybacks in recent years (up to and including 2023) suggests a positive trend and commitment to returning value to shareholders. Overall, the trend seems cautiously positive, but the reliability over the entire period could be considered moderate.