The AES Corp's Dividend Analysis
Assessing the Sustainability and Growth of The AES Corp's Dividends
The AES Corp (NYSE:AES) recently announced a dividend of $0.17 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-31. 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 delve into The AES Corp's dividend performance and assess its sustainability.
What Does The AES Corp Do?
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The AES Corp is a global power company. Its current generation portfolio as of year-end 2022 consists of over 32 gigawatts of generation including renewable energy (46%), gas (32%), coal (20%), and oil (2%). The AES Corp has majority ownership and operates six electric utilities distributing power to 2.6 million customers.
A Glimpse at The AES Corp's Dividend History
The AES Corp has maintained a consistent dividend payment record since 2012, with dividends currently distributed on a quarterly basis. The AES Corp is recognized as a dividend achiever, a prestigious title awarded to companies that have increased their dividend annually for at least the past 12 years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down The AES Corp's Dividend Yield and Growth
The AES Corp currently boasts a 12-month trailing dividend yield of 3.87% and a 12-month forward dividend yield of 3.90%, indicating an anticipated increase in dividend payments over the next year.
Over the past three years, The AES Corp's annual dividend growth rate was 5.00%. This rate jumps to 5.50% when extended to a five-year period, and over the past decade, The AES Corp's annual dividends per share growth rate stands at an impressive 23.30%.
Considering The AES Corp's dividend yield and five-year growth rate, the 5-year yield on cost for The AES Corp stock is approximately 5.06%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, it's crucial to evaluate the company's payout ratio. The AES Corp's dividend payout ratio is 0.43 as of 2023-09-30, suggesting a balance between distributing earnings as dividends and retaining funds for growth and downturns.
The AES Corp's profitability rank is 6 out of 10, indicating fair profitability with net profit reported in 6 out of the past 10 years.
Growth Metrics: The Future Outlook
Robust growth metrics are essential for sustaining dividends. The AES Corp's growth rank of 6 out of 10 suggests a fair growth outlook. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with a 7.30% average annual increase.
The AES Corp's 3-year EPS growth rate and 5-year EBITDA growth rate of 8.50% further showcase its potential for sustaining dividends.
Next Steps in Dividend Investment
In conclusion, The AES Corp's consistent dividend payments, impressive growth rate, moderate payout ratio, and fair profitability and growth metrics make it a noteworthy consideration for dividend investors. The company's ability to grow its dividends over a decade positions it as a reliable payer in the eyes of many investors. With the upcoming dividend payment and the historical performance as a backdrop, value investors may find The AES Corp (NYSE:AES) to be an attractive option for their portfolios. Will The AES Corp continue its trajectory of dividend growth, and how will its financial health support this in the years to come?
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
