CBK.DE 15.52 (-0.39%)
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Last update on 2024-06-27

Commerzbank (CBK.DE) - Dividend Analysis (Final Score: 2/8)

Commerzbank (CBK.DE) dividend analysis scoring 2/8. Comprehensive evaluation on dividend payout consistency, growth, and coverage.

Knowledge hint:
The dividend analysis assesses the performance and stability of Commerzbank (CBK.DE) dividend policy using a 8-criteria scoring system.
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Short Analysis - Dividend Score: 2

We're running Commerzbank (CBK.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?
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?
0

The dividend analysis for Commerzbank (CBK.DE) shows a low score of 2 based on an 8-criteria system, indicating significant concerns for potential investors focused on dividend income. The key issues include a dividend yield lower than the industry average, highly unstable and negative dividend growth rates, inconsistent payout ratios, and insufficient cash flow coverage. There is a lack of stable dividends, with many years of non-payment, and Commerzbank has not maintained a long-term dividend payment history. Additionally, the company's stock repurchase activity has been unreliable over the past 20 years.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Commerzbank (CBK.DE) appears to be an unreliable option for dividend-focused investors. The instability in dividend payments, low dividend yield compared to the industry average, and insufficient earnings and cash flow coverage suggest it may not be ideal for those seeking steady dividend income. Prospective investors may want to explore other options with more consistent and higher yielding dividend policies.

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 represents the ratio of a company's annual dividend compared to its share price. It's a crucial metric for income-focused investors.

Historical Dividend Yield of Commerzbank (CBK.DE) in comparison to the industry average

Commerzbank's dividend yield is currently at 1.8587%, compared to the industry average of 2.76%. This is somewhat below the industry average, which may be less attractive for investors looking for dividend income. Historical data shows significant fluctuations in Commerzbank's dividend yield, ranging from 0% to as high as 3.7979% in 2020. The notable volatility, as well as periods of not paying any dividend (2004, 2009-2013, 2015, 2017, 2020, 2021), may raise concerns over the bank's dividend reliability. Additionally, given the historical stock price decline—from €124.61 in 2003 to about €10.76 in 2023—the lower dividend yield further complicates its investment appeal. Thus, while currently yielding 1.8587%, the bank still trails behind the industry standard of 2.76%, suggesting room for improvement.

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

Commerzbank's Dividend Growth Rate is analyzed over the last 20 years to understand its capacity for sustained increases. The criterion looks for a rate higher than 5%, showing consistent growth.

Dividend Growth Rate of Commerzbank (CBK.DE)

Examining the dividend data for Commerzbank from 2003 to 2023 reveals multiple years with dividend ratios either at zero or negative—such as -75% in 2003, -100% in 2004, 2009, 2017, and 2021, along with several years of 0%. The few positive years like 100% in 2006 and 33.33% in 2008 are insufficient to offset the negative and zero values. Over the past two decades, the average dividend growth rate is -13.89%, which is far below the 5% growth criterion. This overall trend is unfavorable, reflecting instability and inconsistency in dividend payouts, indicating the bank's struggle to stabilize or grow its dividend payouts effectively.

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

Explain the criterion for Commerzbank (CBK.DE) and why it is important to consider

Dividends Payout Ratio of Commerzbank (CBK.DE)

The Average Payout Ratio is a critical indicator of a company’s ability to sustain its dividend payments over the long term. A payout ratio higher than 65% suggests that the company is using more than 65% of its earnings to pay dividends, leaving less room for reinvestment or to cushion against fluctuations in profits. For Commerzbank, assessing if they maintained an Average Payout Ratio lower than 65% in the last 20 years is vital to gauge their dividend stability and long-term financial health.

Dividends Well Covered by Earnings?

When evaluating dividends, it is essential to determine if the company's earnings sufficiently cover the dividend payouts. Typically, a company's earnings per share (EPS) should be higher than its dividend per share (DPS) to ensure dividends are sustainable. This measure is crucial for long-term investors who rely on dividend income.

Historical coverage of Dividends by Earnings of Commerzbank (CBK.DE)

Analyzing Commerzbank's data from 2003 to 2023 reveals a highly variable relationship between its EPS and DPS. For instance, in 2003 and 2009, dividends were not well-covered due to negative EPS. Positive trends appear in years like 2007 and 2018, where EPS sufficiently covered DPS. However, several years witnessed no dividends despite positive earnings, as seen in 2011 and more recently in 2021. The trend is unstable, reflecting challenges in consistently generating profits to cover dividends. The latest data from 2023 shows improvement with a coverage ratio of 0.1120, indicating a move towards sustainable dividend policies. However, long-term consistency remains a concern.

Dividends Well Covered by Cash Flow?

dividends well covered by cash flow

Historical coverage of Dividends by Cashflow of Commerzbank (CBK.DE)

Interpreting the trend of the Dividend Cover Ratio, the first indicator is to verify how well free cash flow covers the dividend payout. A ratio above 1 indicates that the company generates enough cash to cover its dividends, while a ratio below 1 suggests potential issues. For Commerzbank, the ratios for most years from 2003 to 2023 are below 1. Specifically notable are the years 2007, 2008, 2011, 2012, 2015, and 2018, where the ratios are even negative, indicating a highly adverse cash flow situation relative to dividend payouts. In these challenging years, the free cash flow was insufficient to cover any dividend payments. Other years like 2004, 2009, 2010, 2011, 2012, 2020, and 2021 show ratios of zero or near zero, suggesting no dividend payments or free cash flow being able to cover them. In good years such as 2014 and 2019, the ratios are positive but remain significantly below 1, still pointing towards a model where dividends are not thoroughly backed by actual free cash flow. This trend highlights serious concerns for investors relying on dividends, as consistent cash flow generation to cover dividends seems weak. This trend is negative for dividend-focused investors.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends refer to the consistency in the dividend per share issued by the company. It is a critical criterion for income-seeking investors as it ensures the reliability of dividend payments.

Historical Dividends per Share of Commerzbank (CBK.DE)

Over the past 20 years, Commerzbank's dividend payment history shows significant fluctuations. The dividend per share (DPS) data portrays a highly concerning trend with multiple years during which no dividends were paid, notably in 2004, 2009 through 2013, 2015, and from 2018 to 2021. The critical drop occurred in several consecutive years instead of a reduction of 20% or more in any single year. This recurring pattern of non-payment indicates a lack of stability in Commerzbank's dividend strategy, which is typically unfavorable for income-seeking investors. For instance, from a consistent dividend of 1 in 2008, it dropped to zero in 2009 and continued to remain zero in the majority of subsequent years until 2021, with only sporadic instances of payments like 0.2 in 2016 and 2022.

Dividends Paid for Over 25 Years?

Explain the criterion for Commerzbank (CBK.DE) and why it is important to consider

Historical Dividends per Share of Commerzbank (CBK.DE)

Dividends Paid for Over 25 Years. It examines whether Commerzbank (CBK.DE) has been consistently paying dividends for more than 25 years. This criterion is crucial because a long-term dividend payment track record often provides investors with assurance of the company's long-term profitability and financial stability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company’s commitment to returning capital to shareholders by reducing the number of shares outstanding and enhancing shareholder value.

Historical Number of Shares of Commerzbank (CBK.DE)

Over the past 20 years, Commerzbank has repurchased its shares only in 2023 after significant dilution of shares from 2009 onwards. For example, the number of shares ballooned from approximately 128 million in 2009 to over 913 million in 2013. Although a repurchase occurred in 2023 bringing the number down to about 1.245 billion shares, the overall trend suggests inconsistent capital return practices. This trend is generally unfavorable as reliable and consistent repurchasing activities often signal financial health and confidence in future prospects, which isn’t demonstrated here.


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