CenterPoint Energy Inc's Dividend Analysis
Assessing the Sustainability of CenterPoint Energy Inc's Upcoming Dividend
CenterPoint Energy Inc (NYSE:CNP) recently announced a dividend of $0.2 per share, payable on 2023-12-14, with the ex-dividend date set for 2023-11-15. 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 CenterPoint Energy Inc's dividend performance and assess its sustainability.
What Does CenterPoint Energy Inc Do?
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CenterPoint Energy owns a portfolio of businesses. Its regulated electric utilities provide transmission and distribution services to more than 2.5 million customers in the Houston area, southern Indiana, and west central Ohio. The company has natural gas distribution systems in six states serving approximately 4 million customers.
A Glimpse at CenterPoint Energy Inc's Dividend History
CenterPoint Energy Inc has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down CenterPoint Energy Inc's Dividend Yield and Growth
As of today, CenterPoint Energy Inc currently has a 12-month trailing dividend yield of 2.81% and a 12-month forward dividend yield of 2.99%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, CenterPoint Energy Inc's annual dividend growth rate was -15.30%. Extended to a five-year horizon, this rate increased to -11.20% per year. And over the past decade, CenterPoint Energy Inc's annual dividends per share growth rate stands at -1.90%.
Based on CenterPoint Energy Inc's dividend yield and five-year growth rate, the 5-year yield on cost of CenterPoint Energy Inc stock as of today is approximately 1.55%.
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, CenterPoint Energy Inc's dividend payout ratio is 0.60.
CenterPoint Energy Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CenterPoint Energy Inc's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. CenterPoint Energy Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and CenterPoint Energy Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CenterPoint Energy Inc's revenue has increased by approximately -0.50% per year on average, a rate that underperforms approximately 83.37% 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, CenterPoint Energy Inc's earnings increased by approximately 11.30% per year on average, a rate that underperforms approximately 32.81% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -17.20%, which underperforms approximately 90.2% of global competitors.
Engaging Conclusion
In conclusion, CenterPoint Energy Inc's consistent dividend history and current yield are attractive features for income-focused investors. However, the negative dividend growth rate and underperformance in revenue and earnings growth relative to peers raise concerns about the long-term sustainability of these payments. The payout ratio and profitability rank provide some reassurance, but the overall picture suggests that investors should keep an eye on the company's future earnings and growth potential when considering CenterPoint Energy Inc as a dividend investment. Will the company's strategic initiatives and market position allow it to overcome these challenges and continue rewarding shareholders? Only time will tell. For those interested in exploring further, 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.
