CMS Energy Corp's Dividend Analysis
Exploring the Sustainability and Growth of CMS Energy Corp's Dividends
CMS Energy Corp(NYSE:CMS) recently announced a dividend of $0.49 per share, payable on 2023-11-30, with the ex-dividend date set for 2023-11-02. 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 CMS Energy Corps dividend performance and assess its sustainability.
What Does CMS Energy Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
CMS Energy is an energy holding company with three principal businesses. Its regulated utility, Consumers Energy, provides regulated natural gas service to 1.8 million customers and electric service to 1.9 million customers in Michigan. CMS Enterprises is engaged in wholesale power generation, including contracted renewable energy. CMS sold EnerBank in October 2021.
A Glimpse at CMS Energy Corp's Dividend History
CMS Energy Corp has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a quarterly basis. CMS Energy Corp has increased its dividend each year since 2007. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 16 years.
Breaking Down CMS Energy Corp's Dividend Yield and Growth
As of today, CMS Energy Corp currently has a 12-month trailing dividend yield of 3.54% and a 12-month forward dividend yield of 3.60%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, CMS Energy Corp's annual dividend growth rate was 6.30%. Extended to a five-year horizon, this rate increased to 6.70% per year. And over the past decade, CMS Energy Corp's annual dividends per share growth rate stands at 6.90%.
Based on CMS Energy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of CMS Energy Corp stock as of today is approximately 4.90%.
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, CMS Energy Corp's dividend payout ratio is 0.76. This may suggest that the company's dividend may not be sustainable.
CMS Energy Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CMS Energy 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
To ensure the sustainability of dividends, a company must have robust growth metrics. CMS Energy Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and CMS Energy Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CMS Energy Corp's revenue has increased by approximately 8.40% per year on average, a rate that outperforms than approximately 52.88% 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, CMS Energy Corp's earnings increased by approximately 8.60% per year on average, a rate that outperforms than approximately 57.35% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 9.40%, which outperforms than approximately 63.34% of global competitors.
Concluding Remarks
In conclusion, CMS Energy Corp's consistent dividend payments, impressive growth rate, and solid profitability metrics indicate a promising outlook for the company. However, the relatively high payout ratio warrants caution and suggests a need for close monitoring of the company's future earnings and dividend policies. Despite these concerns, CMS Energy Corp's robust growth metrics and strong revenue model provide a positive signal for the sustainability of its dividends in the long run.
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.
