adidas AG (ETR:ADS) Goes Ex-Dividend: Is a 1.0% Yield Worth the Wait?
2min read The upcoming ex-dividend date for adidas ag (ETR:ADS) on May 16, 2025, marks a critical moment for income investors. With a 1.0% dividend yield and a payout history rooted in stability, the sportswear giant presents an intriguing opportunity—but is this a dividend to chase, or a trap masked by misleading numbers? Let’s dissect the facts.
The Ex-Dividend Date: Timing is Everything
Shareholders who own adidas stock before May 16, 2025, will be eligible for the next dividend payment, scheduled for May 20, 2025. The dividend per share stands at €2.00, reflecting a continuation of the company’s 2024 policy. However, this figure contrasts sharply with the €0.70 per share paid in both 2023 and 2024. This sudden spike raises questions: Is this a one-time adjustment, a misinterpretation of data, or a strategic shift?
Analysts note that the dividend’s sustainability hinges on earnings trends. Despite a 35% payout ratio (dividend relative to earnings) and a 22% cash payout ratio (dividend relative to cash flow), adidas’s earnings per share (EPS) have declined by 10% annually over the past five years. This erosion suggests that even a low payout ratio may not be sustainable if the company cannot reverse its revenue slump.
Dividend History: Stability Amid Stagnation
Over the past decade, adidas’s dividend grew at an annualized rate of 2.9%, a modest but consistent pace. However, the past two years saw no growth, with dividends frozen at €0.70 per share. The 2025 jump to €2.00—if confirmed—would represent a 185% increase, far outpacing historical trends. While the company cites strong cash flow (€1.5 billion in 2024), the sudden leap may reflect a one-off payout tied to fiscal year 2024 results rather than a new baseline.
Ask Aime: What's the deal with adidas AG's dividend jump to €2.00 per share?
Investors should also consider the dividend yield’s context. At 1.0%, adidas’s yield lags behind peers like Nike (1.5%) and Lululemon (2.0%). However, analysts project the yield to rise to 2.5% over three years, assuming share prices remain stable or decline. This forecast hinges on whether adidas can stabilize its earnings, which have been pressured by supply chain costs and shifting consumer preferences.
Valuation and Risks: A Dividend with Strings Attached
Adidas’s current share price of €209.00 (as of May 2025) places its price-to-earnings (P/E) ratio at 15x, modestly undervalued relative to its five-year average of 18x. Yet, the stock’s volatility—falling 20% from late 2022 to early 2024—highlights the risks of relying on dividend yield alone.
Critically, the company’s dividend policy is not immune to strategic shifts. In 2023, adidas slashed its dividend from €1.00 to €0.70 per share amid profit warnings, a reminder that even “stable” dividends can retreat.
Conclusion: A Dividend to Consider—But With Caution
Adidas’s 1.0% yield and upcoming ex-dividend date create a compelling hook for income investors. Key positives include:
- Strong cash flow coverage: A 22% cash payout ratio leaves ample room for dividends even if earnings dip further.
- Analyst optimism: The projected 2.5% yield by 2028 suggests confidence in earnings recovery.
However, the risks are clear:
- Earnings decline: A 10% annual EPS drop over five years raises red flags about long-term sustainability.
- Dividend volatility: The abrupt shift to €2.00 per share in 2025 may not reflect a permanent increase.
For investors, the ex-dividend date offers a chance to lock in this payout—but they should pair it with a long-term view of adidas’s turnaround efforts. If the company can stabilize its core brands (e.g., Originals, Performance) and capitalize on emerging markets, the dividend’s growth potential could outweigh its risks. Until then, the 1.0% yield remains a starting point, not a guarantee.
Final verdict? Hold for the dividend, but keep a close eye on earnings trends. The clock is ticking, and so is adidas’s need to prove it can roar back.
