Examining the Dividend History, Yield, Growth, and Sustainability of Eversource Energy (ES, Financial)
Eversource Energy (ES) recently announced a dividend of $0.68 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Eversource Energy's dividend performance and assess its sustainability.
What Does Eversource Energy Do?
Eversource Energy is a diversified holding company with subsidiaries that provide rate-regulated electric, gas, and water distribution service to more than 4 million customers in the Northeast U.S. The company expanded its service territories with acquisitions of NStar (2012), Aquarion (2017), and Columbia Gas (2020). Eversource is exiting its 50% partnership with European utility Orsted to develop 2 gigawatts of offshore wind projects by 2025. The company exited most of its unregulated businesses in 2006.
A Glimpse at Eversource Energy's Dividend History
Eversource Energy has maintained a consistent dividend payment record since 1999. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Eversource Energy's Dividend Yield and Growth
As of today, Eversource Energy currently has a 12-month trailing dividend yield of 4.09% and a 12-month forward dividend yield of 4.21%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Eversource Energy's annual dividend growth rate was 6.00%. Extended to a five-year horizon, this rate decreased to 5.20% per year. And over the past decade, Eversource Energy's annual dividends per share growth rate stands at 5.70%.
Based on Eversource Energy's dividend yield and five-year growth rate, the 5-year yield on cost of Eversource Energy stock as of today is approximately 5.27%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Eversource Energy's dividend payout ratio is 0.78. This may suggest that the company's dividend may not be sustainable.
Eversource Energy's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eversource Energy's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Eversource Energy's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Eversource Energy's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Eversource Energy's revenue has increased by approximately 10.30% per year on average, a rate that outperforms approximately 60.7% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Eversource Energy's earnings increased by approximately 13.00% per year on average, a rate that outperforms approximately 65.31% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 5.30%, outperforms approximately 49.56% of global competitors.
In conclusion, Eversource Energy's consistent dividend payments, notable growth rates, and strong profitability metrics make it an attractive proposition for investors seeking dividend income. However, the high payout ratio warrants caution. Investors should keep an eye on Eversource Energy's growth metrics and profitability to ensure the sustainability of its dividends in the long run.
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