BEI.DE 136.7 (+0.63%)
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Last update on 2024-06-27

Beiersdorf (BEI.DE) - Dividend Analysis (Final Score: 5/8)

Analyze Beiersdorf (BEI.DE) and their dividend policy performance over 20 years using an 8-criteria scoring system. Final Score: 5/8.

Knowledge hint:
The dividend analysis assesses the performance and stability of Beiersdorf (BEI.DE) dividend policy using a 8-criteria scoring system.
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Short Analysis - Dividend Score: 5

We're running Beiersdorf (BEI.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?
0
Average annual Growth Rate higher than 5% in the last 20 years?
1
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?
1
Reliable Stock Repurchases Over the Past 20 Years?
1

This dividend analysis looks at Beiersdorf's dividend policy using 8 criteria. Firstly, Beiersdorf's current dividend yield is low at 0.5158%, significantly lagging behind the industry average of 1.82%. The average dividend growth rate of approximately 6.39% shows some growth, but with high volatility year-to-year. Beiersdorf's payout ratio averages around 70.64%, crossing the sustainable 65% threshold, though it's improving recently. Unfortunately, dividends aren't well-covered by earnings or free cash flow, with concerning trends in both areas. Furthermore, Beiersdorf's dividends have unstable histories with significant drops in various years. The company has, however, consistently paid dividends for over 25 years, and reliable stock repurchases are a positive sign.

Insights for Value Investors Seeking Stable Income

Given Beiersdorf's low dividend yield and instability in dividends coverage by earnings and cash flow, it may not be the best pick for income-focused investors. While long-term investors may appreciate the company's attempt to maintain dividends and engage in stock repurchases, the high payout ratio and erratic dividend history could point to risks. Therefore, unless you prioritize potential growth and stock repurchase benefits over immediate and consistent returns, this may not be the best stock for 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 measures how much a company pays in dividends each year relative to its stock price. It is an important metric for investors seeking income from investments.

Historical Dividend Yield of Beiersdorf (BEI.DE) in comparison to the industry average

Beiersdorf's current dividend yield of 0.5158% is considerably lower than the industry average of 1.82%. Looking at the trend over the last 20 years, Beiersdorf's dividend yield has seen a general decline, from a high of 10.4641% in 2004 to the current low. This suggests that the company's dividends have not kept pace with its stock price increases. For yield-focused investors, this trend is less attractive, especially compared to industry peers. The lower yield may indicate the company's focus on reinvesting earnings into growth rather than returning them to shareholders. This strategy could be beneficial for growth but does not favor income-focused investors.

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

The Dividend Growth Rate over an extended period, such as 20 years, helps investors gauge the stability and consistency of a company's dividend policies. A growth rate higher than 5% indicates a strong commitment to returning value to shareholders.

Dividend Growth Rate of Beiersdorf (BEI.DE)

Analyzing Beiersdorf's Dividend Growth Rate over the past 20 years using the given data, it is evident that the growth rate has been quite volatile. In 2009, there is a 100% increase but in several years, it is negative or zero. The average dividend growth ratio is approximately 6.39%, suggesting some overall growth, but the inconsistency year-to-year may be concerning for dividend-focused investors. This inconsistency might indicate fluctuations in the company's earnings or a strategic choice to prioritize reinvestment over steady dividend payouts. Stability is key in dividend investment, and Beiersdorf's fluctuating growth rate might be seen as a risk for those seeking reliable income from dividends.

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

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

Dividends Payout Ratio of Beiersdorf (BEI.DE)

Inspecting Beiersdorf's payout ratio over the past 20 years reveals several critical insights. The average payout ratio lands at approximately 70.64%, which is distinctly above the 65% threshold that is generally deemed sustainable. A consistently high payout ratio suggests that the company is distributing a significant portion of its earnings as dividends, leaving less retained earnings for reinvestment or to buffer against economic downturns. Notably, there are years like 2003, 2004, 2005, 2011, and other years in which payout ratios were extremely high relative to their earnings. Conversely, there has been a trend towards lower payout ratios from 2014 onwards, which indicates an effort towards maintaining a more sustainable dividend policy. While an overall average above the 65% mark might be concerning, the downward trend in recent years could be seen as favorable. Investors should closely monitor this trend moving forward to ensure that the company adheres to sound financial practices.

Dividends Well Covered by Earnings?

Dividends are well covered by earnings when the earnings per share (EPS) are sufficiently higher than the dividend. This ensures the company has enough profits to sustainably pay its dividends.

Historical coverage of Dividends by Earnings of Beiersdorf (BEI.DE)

In the analysis of Beiersdorf (BEI.DE), the trend of earnings per share (EPS) and dividends per share is critical to examine the company's ability to cover its dividends. A ratio above 1 indicates that the earnings can comfortably cover the dividends, whereas a ratio less than 1 signals potential pressure on the company to meet its dividend payouts. For Beiersdorf, the EPS to dividend per share coverage ratio has consistently been below 1 since 2006, except in specific years where it managed to peak higher than 1 (e.g., 2011). Notably, the coverage ratios post-2012 have been showing a declining trend, indicating a challenge in covering dividends, with the 2022 and 2023 ratios hitting particularly concerning levels (0.210 and 0, respectively). This trend highlights the increasing difficulty for Beiersdorf in maintaining its dividend sustainability. In conclusion, the decreasing coverage ratio points to worsening circumstances, which is not a good trend for the financial health of Beiersdorf and raises concerns regarding dividend reliability going forward.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow assess if a company's free cash flow adequately covers dividend payouts. It's crucial for sustainable dividends, ensuring cash flow exceeds payouts.

Historical coverage of Dividends by Cashflow of Beiersdorf (BEI.DE)

Beiersdorf's trend in free cash flow versus dividend payouts suggests periods of both adequate coverage and concern. The ideal coverage ratio is above 1, meaning the free cash flow fully covers the dividends paid. Reviewing Beiersdorf's data from 2003 to 2023, several years exhibit coverage well below 1. For instance, 2009 (0.476), 2012 (0.486), 2017 (0.222), 2019 (0.240), and notably a ratio of 0 in 2004 when no dividend payout occurred. The ratio spiked to an unsustainable 1.656 in 2014, indicating potential inefficiencies in cash flow utilization. Most recently in 2022, the coverage ratio of 0.639 reflects a better position than some earlier years, but still lacks the ideal threshold. Therefore, while there are years with robust coverage (above 0.5), the overall trend depicts inconsistency, raising concerns about the sustainability of dividends during low free cash flow periods

Stable Dividends Since the Company Began Paying Dividends?

Examine and interpret the stability of dividends over the past 20 years for Beiersdorf (BEI.DE) and explain why consistency is crucial for income-seeking investors.

Historical Dividends per Share of Beiersdorf (BEI.DE)

Upon analyzing the dividend per share data for the past 20 years, there were considerable fluctuations in Beiersdorf's dividends. Specifically: 2008 saw a decline of roughly 45% compared to 2007; 2010 plunged by 50% from 2009; 2018 and subsequent years displayed a consistent but reduced dividend payout of EUR 0.7. These frequent declines, each exceeding 20%, suggest instability, which can be detrimental for income-focused investors relying on predictable earnings.

Dividends Paid for Over 25 Years?

Explain the criterion for Beiersdorf (BEI.DE) and why it is important to consider

Historical Dividends per Share of Beiersdorf (BEI.DE)

This criterion assesses if a company has consistently paid dividends for over 25 years, which indicates financial stability and reliability. It is crucial as it reflects the company’s ability to generate consistent profit.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Beiersdorf (BEI.DE) and why it is important to consider

Historical Number of Shares of Beiersdorf (BEI.DE)

Reliable stock repurchases are a critical indicator of a company's commitment to returning value to its shareholders. By consistently repurchasing its own shares, a company can improve its earnings per share (EPS) and potentially increase its stock price, making it attractive for investors. Moreover, stock repurchases show that a company has confidence in its future prospects and financial stability.


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