October 17, 2025 a 12:47 pm
BAX: Dividend Analysis - Baxter International Inc.
Baxter International Inc., with a market cap of over $11.8 billion, presents a mixed dividend profile. Despite being hampered by a challenging earnings environment, the company has maintained a long-standing history of dividend payouts over 44 years. However, recent figures, such as a negative earnings payout ratio, urge potential investors to assess its dividend sustainability carefully.
📊 Overview
Baxter International operates in the healthcare sector, offering a dividend yield of approximately 2.75%. The current dividend per share stands at $1.16, supported by a substantial 44 years of dividend history. A key factor to note is the absence of recent dividend cuts, which reflects management's commitment to shareholder returns despite recent financial pressures.
| Metric | Value |
|---|---|
| Sector | Healthcare |
| Dividend yield | 2.75 % |
| Current dividend per share | 1.16 USD |
| Dividend history | 44 years |
| Last cut or suspension | None |
📈 Dividend History
Baxter's dividend history underscores a prolonged commitment to shareholder returns, with uninterrupted payouts and gradual increases. The visibility of past dividends is crucial for confidence in the company's future payout potentials.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 0.51 |
| 2024 | 1.04 |
| 2023 | 1.16 |
| 2022 | 1.15 |
| 2021 | 1.085 |
📊 Dividend Growth
The examination of Baxter's dividend growth highlights modest changes over recent years, with minimal growth emphasizing a stable yet conservative approach to raising shareholder returns. This conservative growth is indicative of the challenges the company faces in its financial operations.
| 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
Payout ratios reflect the proportion of earnings and cash flow allocated to dividends. With an EPS-based ratio of -382.88% and FCF-based at 178.43%, these figures indicate excessive dividends compared to current earnings and cash flow, posing sustainability concerns.
| Key figure ratio | Value |
|---|---|
| EPS-based | -382.88 % |
| Free cash flow-based | 178.43 % |
The payout ratio suggests that dividends are not covered by current earnings, raising red flags about its long-term sustainability.
💵 Cashflow & Capital Efficiency
Analyzing cash flows and capital efficiency reveals mixed performance with stability in free cash flow yields and a decline in earnings yield. Monitoring these metrics is crucial as they reflect the company's ability to generate cash and efficiently allocate capital for future growth.
| 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 | 0.45 | 0.25 | 0.52 |
| Stock-based Compensation to Revenue | 1.07 % | 1.11 % | 1.39 % |
| Free Cash Flow / Operating Cash Flow Ratio | 54.86% | 74.74% | 47.56% |
The capital efficiency metrics reveal a focus on sustainable cash flow generation, but the high CAPEX requirements may strain resources in challenging financial periods.
🔍 Balance Sheet & Leverage Analysis
The balance sheet analysis indicates significant leveraging with a net debt to EBITDA of 8.83, which is concerning. Healthy ratios are critical to ensure ongoing operations and strategic flexibility, with leverage being a pivotal aspect for shareholder returns.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 1.93 | 1.68 | 2.95 |
| 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 | N/A | N/A | N/A |
| Quick Ratio | 1.05 | 1.18 | 1.12 |
| Financial Leverage | 3.70 | 3.37 | 4.85 |
The leverage ratios suggest a high dependency on debt, which could impact financial stability in the event of an economic downturn.
🏦 Fundamental Strength & Profitability
Fundamental and profitability metrics paint a complex picture for Baxter, as returns have been negative in specific recent periods, highlighting the importance of cost controls and operational efficiency for future profitability.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -9.32 % | 31.61 % | -41.71 % |
| Return on Assets | -2.52 % | 9.39 % | -8.60 % |
| Margins: Net | -6.10 % | 25.64 % | -24.19 % |
| Margins: EBIT | 1.12 % | 7.24 % | -28.19 % |
| Margins: EBITDA | 10.49 % | 16.74 % | -17.53 % |
| Margins: Gross | 37.46 % | 40.06 % | 35.29 % |
| Research & Development to Revenue | 5.55 % | 5.00 % | 4.47 % |
The company's profitability is under pressure, yet strategic investments in research and development suggest a focus on future growth potential.
📈 Price Development
📊 Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend growth | 2 | |
| Payout ratio | 1 | |
| Financial stability | 2 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 1 |
Overall Score: 20/40
🔍 Rating
Baxter International's dividend profile presents both opportunities and challenges. The long history of dividend payments and high continuity score are positive signals for investors. However, financial stability concerns and a high payout ratio pose risks. Investors should consider these factors carefully in their investment decisions, possibly limiting investments until financial metrics improve.