CRM 256.03 (+1.25%)
US79466L3024SoftwareSoftware - Application

Last update on 2024-06-27

Salesforce (CRM) - Dividend Analysis (Final Score: 4/8)

Comprehensive Salesforce (CRM) Dividend Analysis: Evaluating stability and performance with an 8-criteria scoring system.

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

We're running Salesforce (CRM) 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?
1
Dividends Well Covered by Earnings?
1
Dividends Well Covered by Cash Flow?
1
Stable Dividends Since the Company Began Paying Dividends?
1
Dividends Paid for Over 25 Years?
0
Reliable Stock Repurchases Over the Past 20 Years?
0

Salesforce (CRM) has a Dividend Score of 4 out of 8 based on specific criteria. The company has a 0% dividend yield over the past 20 years, consistent with its strategy of reinvesting earnings into growth. Salesforce does not have a dividend growth rate and an average payout ratio of 0%, choosing capital growth over dividends. Its EPS and Free Cashflow are sufficient to cover potential dividends, although no dividends were distributed. The company has not maintained stable dividends or paid dividends for over 25 years. Salesforce rarely engaged in stock repurchases, focusing on increasing outstanding shares instead.

Insights for Value Investors Seeking Stable Income

Salesforce (CRM) is not suitable for investors seeking regular income through dividends because it has never paid any dividends and has a high-growth reinvestment strategy. However, long-term growth-oriented investors might find Salesforce attractive due to its commitment to reinvesting earnings for capital appreciation. Consider looking into other dividend-paying companies if you prioritize regular income from your investments.

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?

The dividend yield measures the dividend income an investor receives on a stock relative to its share price.

Historical Dividend Yield of Salesforce (CRM) in comparison to the industry average

Salesforce (CRM) has recorded a consistent dividend yield of 0% for the past 20 years, which is significantly lower than the industry average of 0.79%. Although this might initially be perceived negatively, it is critical to consider Salesforce's business strategy. Salesforce has traditionally focused on reinvesting its earnings into growth opportunities rather than distributing dividends. This reinvestment has contributed to Salesforce’s massive stock price increase, from $4.24 per share in 2004 to $263.14 per share in 2023. Long-term investors might favor capital appreciation over dividends, hence this trend, while low compared to industry norms, aligns well with their high growth strategy.

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

The Dividend Growth Rate measures the annualized percentage rate of growth that a company's dividend per share undergoes over a period.

Dividend Growth Rate of Salesforce (CRM)

Salesforce (CRM) has not paid any dividends over the past 20 years, as reflected by the Dividend Ratio consistently being 0 from 2003 to 2023. Therefore, the Dividend Growth Rate for Salesforce is non-existent. This indicates that Salesforce has not focused on returning capital to shareholders in the form of dividends This trend is neutral when considering dividend-focused investors, the absence of a dividend could be viewed as a lack of direct return; however, for growth-oriented investors, it might indicate that the company is reinvesting its profits wisely.

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

A company's payout ratio compares its total dividends to its net income and is crucial for gauging sustainability.

Dividends Payout Ratio of Salesforce (CRM)

Over the past 20 years, Salesforce (CRM) has maintained an average payout ratio of 0%. This means Salesforce did not distribute any of its earnings as dividends to shareholders, instead reinvesting back into the company. Given Salesforce is a high-growth technology company, this reinvestment strategy prioritizes expansion and innovation. While this trend allows for potentially higher capital gains, it also means dividend-focused investors may not find Salesforce appealing for their income portfolios. Salesforce's consistent reinvestment reflects a growth-oriented financial strategy, which can be advantageous for long-term capital appreciation.

Dividends Well Covered by Earnings?

Earnings per share (EPS) should comfortably cover dividends per share (DPS) to ensure sustainable distributions.

Historical coverage of Dividends by Earnings of Salesforce (CRM)

Salesforce's EPS ranged from a low of -0.4788 in 2013 to a high of 4.4846 in 2021. However, given that the dividend per share (DPS) has consistently been zero from 2003 to 2023, there is no payout which needs coverage by earnings. Therefore, while analyzing the ability to cover dividends using EPS, Salesforce shows a positive trend primarily because there have been no dividends to cover, thus avoiding any financial strain. For income-focused investors, this might not be attractive, but it indicates the company is possibly reinvesting all earnings back into growth opportunities. This trend is neither inherently good nor bad but reflects the company's strategy to emphasize growth over shareholder payouts.

Dividends Well Covered by Cash Flow?

Explain the criterion for Salesforce (CRM) and why it is important to consider

Historical coverage of Dividends by Cashflow of Salesforce (CRM)

Dividends Well Covered by Cash Flow is a measure that evaluates whether a company’s free cash flow is sufficient to cover its dividend payments. This criterion is crucial as it indicates the company’s ability to maintain or increase dividends without relying on external funding or eroding its cash reserves. It is especially important for investors seeking income stability and assurance that dividend payments are sustainable. Salesforce has a Free Cashflow ranging from $3.19 million in 2003 to $6.31 billion in 2023. The Dividend Payout amount for Salesforce has remained at $0 for all years except 2011 when it was $171.96 million, giving a lone percentage of 1.90% coverage that year. Salesforce's future ability to pay dividends seems solid when considering the recent substantial free cash flow increases in 2022 and 2023. This trend suggests good potential for dividends if the company decides to initiate or increase payouts moving forward.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments is a criterion for gauging the consistency and reliability of dividend income. If the dividends per share do not fluctuate significantly, it reflects a company's strong cash flow management, good profitability, and stable earnings. It is particularly appealing to investors who rely on dividends for their income.

Historical Dividends per Share of Salesforce (CRM)

Salesforce (CRM) has not paid any dividends over the past 20 years. The data shows that from 2003 to 2023, the Dividend per Share was consistently $0. This trend might be seen negatively for investors seeking steady income through dividends. Furthermore, since no dividends were paid, the issue of a drop greater than 20% is irrelevant in this context. However, the lack of dividends can also signify that the company is reinvesting its profits back into the business, focusing on growth and expansion, rather than distributing profits to shareholders which is typical for high-growth tech firms like Salesforce.

Dividends Paid for Over 25 Years?

The criterion for considering dividends paid for over 25 years examines whether a company has demonstrated a consistent and reliable history of distributing cash to shareholders. This criterion is crucial because it often indicates a strong and stable financial foundation, long-term profitability, and a commitment to returning value to shareholders.

Historical Dividends per Share of Salesforce (CRM)

Salesforce (CRM) does not pay dividends and has not distributed any dividends to shareholders from 2001 through 2023. This trend indicates that Salesforce does not follow the practice of companies with a long-standing dividend payout history. As of current data, Salesforce has focused its financial strategy on reinvestment into the business and potential growth opportunities instead of returning direct cash to shareholders. For investors seeking regular income through dividends, Salesforce might not be an attractive option. This trend is not favorable for dividend-focused investors, reflecting a growth-oriented business model rather than an income-generating one.

Reliable Stock Repurchases Over the Past 20 Years?

The criterion evaluates whether Salesforce has consistently repurchased its own stock over the past 20 years. This is important as it indicates the company's confidence in its financial stability and future growth.

Historical Number of Shares of Salesforce (CRM)

Over the past 20 years, Salesforce (CRM) has only one year listed as having repurchased shares, which was in 2012. This finding is somewhat underwhelming for investors looking for a company with reliable repurchasing activities. Furthermore, the average number of repurchased shares per year stands at a rather low 18.0415. Instead of repurchasing shares, Salesforce has considerably increased its total number of outstanding shares from 105.5 million in 2003 to 992 million in 2023. This trend indicates a significant dilution of shares, which typically happens when a company issues new shares to raise capital for expansion, acquisitions, and other market strategies. Overall, this pattern may be viewed unfavorably by shareholders looking for returns through stock repurchase programs, as it dilutes their existing holdings.


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