July 19, 2025 a 03:31 pm
BAX: Dividend Analysis - Baxter International Inc.
Baxter International Inc. stands as a stalwart in the healthcare sector, renowned for its consistent dividend payouts with a remarkable 44-year history. However, recent challenges, including a payout ratio exceeding 100% of earnings and negative earnings yield, hint at potential vulnerabilities. While the dividend growth rate over the past five years shows moderate improvement, the financial metrics such as ROE and ROA indicate instability. Investors should prudently weigh these factors when considering Baxter as a dividend investment.
Overview 📊
Delving into the heart of Baxter's financial demeanour, the following key performance indicators (KPIs) present a mixed bag of promising history and current challenges.
| Key Metric | Value |
|---|---|
| Sector | Healthcare |
| Dividend yield | 3.49 % |
| Current dividend per share | 1.16 USD |
| Dividend history | 44 years |
| Last cut or suspension | None |
Dividend History 📈
Baxter's 44-year legacy of consistent dividends underlies its commitment to shareholder value. Despite recent adversities, maintaining uninterrupted dividends speaks to its resilience.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.51 |
| 2024 | 1.04 |
| 2023 | 1.16 |
| 2022 | 1.15 |
| 2021 | 1.085 |
Dividend Growth 🗣️
The trajectory of dividend growth is a pivotal metric for prospective and current investors, showcasing the potential compounding benefits of reinvestment over time. Baxter's last five years reveal modest but steady growth.
| Time | Growth |
|---|---|
| 3 years | -1.40 % |
| 5 years | 4.12 % |
The average dividend growth is 4.12 % over 5 years. This shows moderate but steady dividend growth.
Payout Ratio ⚠️
A pivotal indicator of dividend sustainability is the payout ratio, revealing how much of earnings are distributed as dividends. High ratios might hint at future cuts.
| Key Figure | Ratio |
|---|---|
| EPS-based | -105.77 % |
| Free cash flow-based | 310.82 % |
The negative EPS payout ratio signals financial distress, while a cash flow ratio over 100% suggests potential future cuts without significant business improvement.
Cashflow & Capital Efficiency ✅
The efficiency of capital use and continuity of cash flow are significant determinants of financial health, directly influencing dividend paying ability.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 3.76 % | 6.59 % | 2.24 % |
| Earnings Yield | -4.36 % | 13.58 % | -9.47 % |
| CAPEX to Operating Cash Flow | 45.14 % | 25.26 % | 52.44 % |
| Stock-based Comp. to Revenue | 1.07 % | 1.10 % | 1.39 % |
| Free Cash Flow/Operating Cash Flow Ratio | 54.86 % | 74.74 % | 47.56 % |
The decreasing cash flow yield and low profit margins threaten the company's liquidity and potential for reinvestment. Capital efficiency shows room for enhancement.
Balance Sheet & Leverage Analysis 📉
An organization's leverage and balance sheet health are critical indicators of its sustainability amid financial turbulence, as well as its ability to honor obligations.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 193.12 % | 167.97 % | 294.93 % |
| Debt-to-Assets | 52.16 % | 49.91 % | 60.82 % |
| Debt-to-Capital | 65.88 % | 62.68 % | 74.68 % |
| Net Debt to EBITDA | 10.47 | 6.36 | -8.78 |
| Current Ratio | 1.36 | 1.48 | 1.69 |
| Quick Ratio | 1.05 | 1.18 | 1.12 |
| Financial Leverage | 3.70 | 3.37 | 4.85 |
The heightened debt levels combined with diminishing financial leverage and low interest coverage ratios propose a risk to financial stability.
Fundamental Strength & Profitability 🗣️
A firm's profitability and fundamental strength are crucial for yielding sustainable returns, alongside maintaining competitive advantage in its sector.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -9.32 % | 31.61 % | -41.71 % |
| Return on Assets | -2.52 % | 9.39 % | -8.60 % |
| Net Margin | -6.10 % | 25.64 % | -24.19 % |
| EBIT Margin | 1.12 % | 7.24 % | -28.19 % |
| EBITDA Margin | 10.49 % | 16.74 % | -17.53 % |
| Gross Margin | 37.46 % | 40.06 % | 35.29 % |
| R&D to Revenue | 5.56 % | 5.00 % | 4.47 % |
While gross margins remain competent, the volatile returns and margins underscore the pressure on profitability. Investment in R&D indicates a long-term focus on innovation despite existing shortfalls.
Price Development 📉
Dividend Scoring System 🎯
Baxter International Inc.'s dividend potential is assessed across multiple facets to paint a comprehensive picture for potential investors.
| Criteria | Score | |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 2 | |
| Dividend growth | 3 | |
| Payout ratio | 1 | |
| Financial stability | 2 | |
| Dividend continuity | 4 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 2 |
Total Score: 19 out of 40
Rating ⭐
In conclusion, Baxter International Inc.'s dividends face a challenging environment despite its long-standing commitment to dividend payments. Prospective investors are advised to weigh dividend stability against financial indicators pointing towards underlying weakness. It holds an overall cautious rating until underlying financial metrics improve.