April 22, 2025 a 07:31 am
IRM: Dividend Analysis - Iron Mountain Incorporated
Iron Mountain Incorporated has a significant presence in the market with its notable market cap. The current dividend yield and growth trajectory make it an attractive option for dividend investors. Despite some concerning payout ratios, the company has a robust historical dividend track record, striking a balance between growth and yield. Investors should consider the potential long-term capital appreciation coupled with steady income from dividends.
📊 Overview
Iron Mountain operates within a sector characterized by its stable cash flows, providing a solid foundation for dividend payments. The current dividend yield is 3.21%, accompanied by a dividend growth rate over the past years, making it appealing to income-focused investors. With a commendable 16-year history of dividend distribution and no recent cuts, confidence in its dividend policy is reinforced.
| Factor | Value |
|---|---|
| Sector | Real Estate |
| Dividend Yield | 3.21% |
| Current Dividend per Share | 2.69 USD |
| Dividend History | 16 years |
| Last Cut or Suspension | None |
🗣️ Dividend History
Iron Mountain’s dividend history reflects a commitment to maintaining and growing its dividend payments. This consistent payment history over 16 years without reductions instills confidence among dividend-focused investors. A look into recent dividends indicates slight adjustments ensuring sustainability.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.785 |
| 2024 | 2.730 |
| 2023 | 2.537 |
| 2022 | 2.474 |
| 2021 | 2.474 |
📈 Dividend Growth
Monitoring dividend growth is critical for assessing the potential return on investment. Iron Mountain has shown moderate dividend growth over three and five years, signaling ongoing opportunities for increased income from shares.
| Time | Growth |
|---|---|
| 3 years | 3.34% |
| 5 years | 2.18% |
The average dividend growth is 2.18% over 5 years. This shows moderate but steady dividend growth.
⚖️ Payout Ratio
The payout ratio is a critical indicator of sustainability for dividend payments. Iron Mountain’s payout ratio, when based on EPS, stands at an alarming 438.25%, suggesting potential concerns over dividend coverage from earnings alone. However, the negative free cash flow payout ratio indicates a reliance on other sources, which could challenge sustainability.
| Key Figure | Ratio |
|---|---|
| EPS-based | 438.25% |
| Free Cash Flow-based | -121.36% |
The extremely high EPS payout ratio and negative free cash flow payout ratio raise caution. This may lead to sustainability concerns unless there are significant improvements in earnings or cash flow generation.
🏦 Cashflow & Capital Efficiency
Strong cash flow generation is vital for funding dividend distributions and maintaining operational flexibility. Iron Mountain's cash flow metrics present mixed insights, especially with a negative free cash flow yield and a substantial CAPEX to operating cash flow ratio, indicating pressure on capital efficiency.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 0.30% | -1.13% | -1.93% |
| Earnings Yield | 3.84% | 0.90% | 0.58% |
| CAPEX to Operating Cash Flow | 95.24% | 120.26% | 149.71% |
| Stock-based Compensation to Revenue | 1.14% | 1.34% | 1.92% |
| Free Cash Flow / Operating Cash Flow Ratio | 4.76% | -20.79% | -49.71% |
The substantial proportion of capital expenditures relative to operating cash flow suggests stress on Iron Mountain's capital efficiency, necessitating a critical evaluation for sustainable dividend profiles.
📉 Balance Sheet & Leverage Analysis
A disciplined approach to management of debt levels is crucial for maintaining financial flexibility. Iron Mountain’s leverage ratios are notably elevated, with concerns in debt-to-equity and financial leverage, highlighting potential vulnerabilities.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 20.87 | 69.87 | -8.78 |
| Debt-to-Assets | 0.82 | 0.85 | 0.24 |
| Debt-to-Capital | 0.95 | 0.99 | 1.13 |
| Net Debt to EBITDA | 7.02 | 9.00 | 2.23 |
| Current Ratio | 0.81 | 0.78 | 0.55 |
| Quick Ratio | 0.80 | 0.78 | 0.55 |
| Financial Leverage | 25.35 | 82.56 | -37.20 |
The heightened levels of leverage impart financial risk, necessitating careful monitoring and potential strategic adjustments to enhance balance sheet strength and decrease reliance on debt financing.
🏅 Fundamental Strength & Profitability
Evaluating the company's profitability provides an insight into its competitive standing and earnings quality. Iron Mountain's profitability ratios suggest efficient asset deployment, though net and EBITDA margins indicate room for operational efficiency improvements.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 87.48% | 87.05% | -35.81% |
| Return on Assets | 3.45% | 1.05% | 0.96% |
| Margins: Net | 10.91% | 3.36% | 2.93% |
| Margins: EBIT | 22.10% | 15.07% | 15.95% |
| Margins: EBITDA | 36.71% | 29.54% | 31.01% |
| Margins: Gross | 57.10% | 56.98% | 100.00% |
| R&D to Revenue | 0.00% | 0.00% | 0.00% |
While the EBIT margin highlights robust operational performance, the net margin and return on assets reveal potential for margin improvement and profitability enhancements essential for sustaining dividend growth.
💹 Price Development
📝 Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 4 | |
| Dividend growth | 3 | |
| Payout ratio | 2 | |
| Financial stability | 2 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 2 |
Overall Score: 24/40
✅ Rating
Iron Mountain presents a compelling case for dividend-seeking investors with its solid yield and historical continuity. However, investors must remain vigilant about its high payout ratio and leverage levels which may pose risks. A balanced approach of monitoring operational improvements and strategic interventions could reinforce its attractiveness.