June 20, 2025 a 07:31 am

IP: Dividend Analysis - International Paper Company

Image related to International Paper Company

International Paper Company exhibits a solid dividend history with an admirable continuity of 56 years without any cuts or suspensions. Despite recent challenges reflected in the performance metrics, the company's long-standing dividend policy inspires confidence. However, the payout ratios and recent dividend growth signals suggest areas for improvement.

๐Ÿ“Š Overview

The company's position within its sector suggests strong operational capabilities, particularly within the context of maintaining a stable dividend yield. However, potential investors should be cautious about the future sustainability given the elevated payout ratios.

Metric Detail
Sector Manufacturing
Dividend yield 3.88 %
Current dividend per share 1.85 USD
Dividend history 56 years
Last cut or suspension None

๐Ÿ“ˆ Dividend History

The dividend history showcases consistency which is attractive for income-focused investors. This long dividend track establishes confidence in stable income generation.

Dividend history chart
Year Dividend per Share (USD)
2025 0.9250
2024 1.8500
2023 1.8500
2022 1.8500
2021 1.9199

๐Ÿ“ˆ Dividend Growth

The analysis of dividend growth is vital for projecting future income streams. However, the negative growth rates in recent years require attention.

Time Growth
3 years -1.23 %
5 years -0.60 %

The average dividend growth is -0.60 % over 5 years. This shows moderate but steady dividend growth in the face of challenging financial conditions.

Dividend growth chart

โš ๏ธ Payout Ratio

Payout ratios offer insight into the sustainability of dividend payments. High ratios may suggest potential difficulties in maintaining current dividend levels.

Key figure Ratio
EPS-based 204.14 %
Free cash flow-based -19553.05 %

The EPS payout ratio of 204.14 % and the FCF payout ratio of -19553.05 % signify concerning levels. These indicate the company potentially pays out more in dividends than its earnings and cash flows, raising questions about future payment sustainability.

๐Ÿ“Š Cashflow & Capital Efficiency

Understanding cash flow and capital efficiency measures a company's ability to generate cash relative to its capital investment. This is crucial for sustaining operations and dividends.

Metric 2023 2024
Free Cash Flow Yield 5.52 % 4.05 %
Earnings Yield 2.30 % 2.98 %
CAPEX to Operating Cash Flow 62.25 % 54.89 %
Stock-based Compensation to Revenue 0.31 % 0.26 %
Free Cash Flow / Operating Cash Flow Ratio 37.75 % 45.11 %

The cash flow indicators reflect marginally negative free cash flow yield, with relatively high levels of capital expenditure compared to cash from operations, highlighting the need for operational efficiency improvements.

๐Ÿ“Š Balance Sheet & Leverage Analysis

Balance sheet strength is a core metric of financial health, assessing how well a company manages its debt load relative to its equity and physical assets.

Metric 2024 2023 2022
Debt-to-Equity 0.72 0.71 0.69
Debt-to-Assets 0.26 0.25 0.24
Debt-to-Capital 0.42 0.41 0.41
Net Debt to EBITDA 2.49 2.14 1.71

Overall, the balance sheet reveals manageable leverage, though increasing Net Debt to EBITDA warns of potential liquidity issues. The progressively stable debt ratios provide a degree of comfort regarding the company's ability to service its debt.

๐Ÿ“Š Fundamental Strength & Profitability

Profitability metrics, such as Return on Equity and Assets, are essential for assessing the efficiency and potential growth of a company. Margins provide insight into cost management and business stability.

Metric 2024 2023 2022
Return on Equity 6.82 % 3.45 % 17.70 %
Return on Assets 2.44 % 1.24 % 6.28 %
Net Margin 2.99 % 1.52 % 7.11 %
EBIT Margin 3.10 % 4.25 % 9.04 %
Gross Margin 28.16 % 27.95 % 28.42 %

The mixed performance in fundamental metrics over the past years suggests areas of operational challenges amidst maintaining profitability. High prior ROE and fluctuating margins underscore the variability in cost management efficiency that could impact future profitability.

๐Ÿ“Š Price Development

Price development chart

โœ… Dividend Scoring System

Category Score (1-5) Score Bar
Dividend yield 3
Dividend Stability 4
Dividend growth 2
Payout ratio 1
Financial stability 3
Dividend continuity 5
Cashflow Coverage 2
Balance Sheet Quality 3
Total Score: 23 out of 40

๐Ÿ—ฃ๏ธ Rating

The dividend outlook for International Paper Company is a mix of heritage and caution. While its historic stability stands out, the high payout ratios and negative growth suggest careful reevaluation for dividend-focused portfolios. It may still attract long-term investors valuing stability over short-term performance.