CMS Energy (CMS) Rewards Shareholders With 5.6% Dividend Hike
CMS Energy Corp. CMS recently announced that its board of directors has approved a 5.6% increase in its quarterly dividend rate. The revised quarterly dividend will be 51.50 cents, payable on Feb 29, 2024, to shareholders of record at the close of business on Feb 12, 2024.
The company’s new annualized dividend rate is $2.06 per share, resulting in an annualized dividend yield of 3.5%, based on its share price of $58.84 as of Feb 1, 2024. The company’s current dividend yield is better than the Zacks S&P 500 composite’s 1.36%.
CMS’ History of Dividend Payment
The companies that are involved in utility services generally have stable operations and earnings. Consistent performance and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
CMS has been consistently increasing dividends for the last 18 years. During the nine months ended Sep 30, 2023, CMS Energy paid $461 million as dividend on common stock to its shareholders.
Can We Expect Hikes in the Coming Years?
CMS’ dividend payment history indicates that the company has been performing steadily and generating enough cash flow to distribute dividends to shareholders.
As of Dec 31, 2023, CMS Energy had a total cash and cash equivalents of $227 million, up significantly from the prior year's level of $164 million. For 2023, the company had cash inflow from operating activities worth $2,309 million, reflecting an improvement of 170% from 2022. Such solid cash should enable CMS to duly offer attractive returns to its shareholders in terms of robust dividend payouts.
For the long term, CMS is committed to delivering 6-8% adjusted earnings per share growth. The company aims for a dividend per share growth rate of 6-8%, with a target payout of around 60%. This reinforces its financial prowess through strong earnings and its ability for enhanced dividend disbursements.
Utilities’ Legacy of Dividend Payment
CMS is not the only one in the utility space that has a long dividend payment history. Many other utilities have a track record of increasing dividends. Some of these are:
NRG Energy NRG: On Jan 19, 2024, NRG Energy raised its quarterly dividend to 40.75 cents, marking an 8% increase. The company’s new annualized dividend rate is $1.63 per share. NRG’s payout currently is 29% of earnings.
The current dividend yield of NRG is 2.78%, better than the Zacks S&P 500 composite’s yield of 1.36%. The long-term (three to five years) earnings growth is pegged at 13.8%.
Edison International EIX: On Dec 14, 2023, Edison raised its quarterly dividend to 78 cents, marking a 5.8% increase. This marked the 20th straight year of increase in annual dividend rate. The company’s new annualized dividend rate is $3.12 per share. EIX's payout currently is 64% of earnings.
The current dividend yield of EIX is 4.57%, better than the Zacks S&P 500 composite’s yield of 1.36%. The long-term earnings growth is pegged at 3.7%.
PNM Resources PNM: On Dec 5, 2023, PNM Resources raised its quarterly dividend to 38.75 cents. The company’s new annualized dividend rate is $1.55 per share, marking a 5.4% increase from the prior rate. PNM’s payout currently is 53% of earnings.
The current dividend yield of PNM is 4.05%, better than the Zacks S&P 500 composite’s yield of 1.36%. The long-term earnings growth is pegged at 37%.
Price Performance
Over the past six months, shares of CMS have rallied 0.6% against the industry’s 8.7% decline.
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Zacks Rank
CMS Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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NRG Energy, Inc. (NRG) : Free Stock Analysis Report
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