Ameren Corp's Dividend Analysis
Understanding Ameren Corp's Dividend Sustainability and Growth
Ameren Corp (NYSE:AEE) recently announced a dividend of $0.63 per share, payable on 2023-12-29, with the ex-dividend date set for 2023-12-12. 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 look into Ameren Corp's dividend performance and assess its sustainability.
What Does Ameren Corp Do?
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Ameren Corp operates rate-regulated generation, transmission, and distribution networks that deliver electricity and natural gas in Missouri and Illinois. It serves more than 2.4 million electricity customers and more than 900,000 natural gas customers, showcasing a robust customer base in the utility sector.
A Glimpse at Ameren Corp's Dividend History
Ameren Corp has maintained a consistent dividend payment record since 1984, demonstrating a long-term commitment to returning value to shareholders. Dividends are currently distributed on a quarterly basis, providing a regular income stream for investors.
Ameren Corp has increased its dividend each year since 2009, earning it the status of a dividend achiever, a prestigious recognition for companies with at least 14 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ameren Corp's Dividend Yield and Growth
Ameren Corp currently has a 12-month trailing dividend yield of 3.18% and a 12-month forward dividend yield of 3.23%, indicating an anticipated increase in dividend payments over the next year.
Over the past three years, Ameren Corp's annual dividend growth rate was 7.10%. This rate decreased to 5.80% per year when extended to a five-year horizon. Moreover, over the past decade, Ameren Corp's annual dividends per share growth rate stands at 3.90%.
Based on Ameren Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Ameren Corp stock as of today is approximately 4.22%.
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 2023-09-30, Ameren Corp's dividend payout ratio is 0.56.
Ameren Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ameren Corp's profitability 7 out of 10 as of 2023-09-30, 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
Ameren Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Ameren Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model, with an average annual increase of 8.60%.
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. Ameren Corp's earnings have increased by approximately 6.10% per year on average over the past three years.
Lastly, Ameren Corp's 5-year EBITDA growth rate of 10.90% outperforms approximately 69.12% of global competitors, highlighting its strong earnings before interest, taxes, depreciation, and amortization growth.
Next Steps
Considering Ameren Corp's consistent dividend payments, robust dividend growth rate, prudent payout ratio, and solid profitability and growth metrics, the company presents an attractive proposition for value investors focused on income generation. Investors should continue to monitor these financial health indicators to ensure the dividends remain sustainable in the long term. For those seeking to expand their portfolio with similar investment opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
