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Is Buying MGE Energy Inc (NASDAQ:MGEE) For Its Upcoming $0.32 Dividend A Good Choice?

Brandie Wetzel

Have you been keeping an eye on MGE Energy Inc’s (NASDAQ:MGEE) upcoming dividend of $0.32 per share payable on the 15 March 2018? Then you only have 5 days left before the stock starts trading ex-dividend on the 28 February 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into MGE Energy’s latest financial data to analyse its dividend attributes. See our latest analysis for MGE Energy

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

  • Is it the top 25% annual dividend yield payer?
  • Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
  • Has it increased its dividend per share amount over the past?
  • Can it afford to pay the current rate of dividends from its earnings?
  • Will it have the ability to keep paying its dividends going forward?
NasdaqGS:MGEE Historical Dividend Yield Feb 22nd 18

How does MGE Energy fare?

The current trailing twelve-month payout ratio for the stock is 56.79%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of MGEE it has increased its DPS from $0.95 to $1.29 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, MGE Energy generates a yield of 2.37%, which is on the low-side for Electric Utilities stocks.

Next Steps:

Taking into account the dividend metrics, MGE Energy ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental aspects you should look at:

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.