May 25, 2025 a 02:46 am
ORCL: Dividend Analysis - Oracle Corporation
Oracle Corporation, a heavyweight in the tech industry, offers a unique investment opportunity with its solid dividend track record and potential for growth. However, there are concerns about its financial leverage and payout stability which investors must carefully consider. This analysis provides an in-depth look at Oracle's dividend performance and financial health, giving investors a comprehensive view of its potential. The company's moderate dividend yield is complemented by consistent dividend growth, though its high leverage ratios signal some caution.
📊 Overview
| Sector | Dividend Yield | Current Dividend Per Share | Dividend History | Last Cut or Suspension |
|---|---|---|---|---|
| Technology | 1.27% | 1.60 USD | 17 years | None |
🔎 Dividend History
Oracle has a robust dividend history spanning 17 years with no recent cuts, reflecting its commitment to returning value to shareholders. This consistency is crucial for long-term income investors seeking reliability and stability in dividend payments.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 0.90 |
| 2024 | 1.60 |
| 2023 | 1.52 |
| 2022 | 1.28 |
| 2021 | 1.20 |
📈 Dividend Growth
Assessment of dividend growth is essential for gauging future income potential. Over the past three years, Oracle's dividends grew by a modest rate, indicative of a steady but cautious approach to dividend increases.
| Time | Growth |
|---|---|
| 3 years | 10.06% |
| 5 years | 11.95% |
The average dividend growth is 11.95% over 5 years. This shows moderate but steady dividend growth.
⚙️ Payout Ratio
Payout ratios provide insight into the sustainability of dividend payments. Oracle's EPS-based payout ratio is 37.88%, demonstrating a conservative payout strategy, while its higher FCF-based ratio of 77.21% necessitates a closer look at cash flow sufficiency to cover obligations.
| Key Figure | Ratio |
|---|---|
| EPS-based | 37.88% |
| Free cash flow-based | 77.21% |
The payout ratio of 37.88% (EPS) reflects a healthy buffer for dividend payments, while the 77.21% (FCF) warrants attention regarding cash flow management.
💼 Cashflow & Capital Efficiency
Understanding Oracle's cash flow dynamics and capital efficiency is paramount for evaluating its capacity to sustain and grow dividends. Indicators like Free Cash Flow Yield and Earnings Yield provide insights into profitability and earnings quality.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 3.67% | 2.97% | 2.59% |
| Earnings Yield | 3.25% | 2.98% | 3.46% |
| CAPEX to Operating Cash Flow | 36.77% | 50.66% | 47.29% |
| Stock-based Compensation to Revenue | 7.50% | 7.10% | 6.16% |
| Free Cash Flow / Operating Cash Flow Ratio | 63.23% | 49.34% | 52.71% |
The data reflects stable cash flows complemented by prudent capital allocation, yet areas such as stock-based compensation should be monitored to ensure ROIC goals are met.
🔍 Balance Sheet & Leverage Analysis
Evaluating Oracle's balance sheet metrics reveals critical insights into its financial leverage and liquidity position. While high leverage signifies potential risk, underlying asset quality and current ratio assessments offer deeper perspectives.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 10.85 | 58.15 | -13.15 |
| Debt-to-Assets | 67.01% | 67.33% | 69.41% |
| Debt-to-Capital | 91.56% | 98.31% | 108.23% |
| Net Debt to EBITDA | 3.89 | 4.27 | 2.87 |
| Current Ratio | 1.02 | 0.91 | 1.62 |
| Quick Ratio | 0.70 | 0.90 | 1.61 |
| Financial Leverage | 16.20 | 86.37 | -18.95 |
Financial leverage is notably high, indicating increased dependency on debt funding, whereas liquidity remains marginally stable. The data call for monitoring Oracle's debt strategy to maintain balance sheet resilience.
✅ Fundamental Strength & Profitability
Key profitability ratios such as Return on Equity (ROE) and operating margins determine Oracle's effectiveness in generating returns and managing expenses efficiently.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 120.26% | 546.47% | -116.45% |
| Return on Assets | 7.42% | 6.33% | 6.15% |
| Net Margin | 19.76% | 17.02% | 15.83% |
| EBIT Margin | 28.80% | 25.29% | 24.51% |
| EBITDA Margin | 40.75% | 37.84% | 44.67% |
| Gross Margin | 71.41% | 72.85% | 79.08% |
| Research & Development to Revenue | 17.20% | 18.85% | 18.13% |
Despite fluctuating ROE, Oracle's margins display solid performance, highlighting its efficient cost management and competitive edge. Sustained focus on R&D investment is also a key growth lever.
📉 Price Development
🗣️ Dividend Scoring System
| Category | Score | Indicator |
|---|---|---|
| Dividend Yield | 3 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 4 | |
| Financial Stability | 3 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 2 |
Total Score: 29/40
⭐ Rating
Overall, Oracle Corporation presents a compelling case for dividend investors with its stable payout track record and moderate growth potential. However, its elevated leverage levels and dependency on debt markets require investors to remain vigilant. Prospective investors should weigh these factors alongside Oracle's technological leadership and strategic investments in innovation as they make informed decisions.