Entergy Corp's Dividend Analysis
Delving into Entergy Corp's Dividend Sustainability and Growth
Entergy Corp (NYSE:ETR) recently announced a dividend of $1.13 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-08. 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 Entergy Corp's dividend performance and assess its sustainability.
What Does Entergy Corp Do?
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Entergy Corp is a holding company with five regulated integrated utilities that generate and distribute electricity to about 3 million customers in Arkansas, Louisiana, Mississippi, and Texas. It is one of the largest power producers in the country with approximately 23 gigawatts of rate-regulated utility-owned power generation capacity. Entergy was the second-largest nuclear owner in the U.S. before it began retiring and selling its plants in the Northeast in 2014.
A Glimpse at Entergy Corp's Dividend History
Entergy Corp has maintained a consistent dividend payment record since 1988. Dividends are currently distributed on a quarterly basis. Entergy Corp has increased its dividend each year since 1999. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 25 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Entergy Corp's Dividend Yield and Growth
As of today, Entergy Corp currently has a 12-month trailing dividend yield of 4.33% and a 12-month forward dividend yield of 4.52%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Entergy Corp's annual dividend growth rate was 3.90%. Extended to a five-year horizon, this rate decreased to 3.00% per year. And over the past decade, Entergy Corp's annual dividends per share growth rate stands at 2.10%.
Based on Entergy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Entergy Corp stock as of today is approximately 5.02%.
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, Entergy Corp's dividend payout ratio is 0.63.
Entergy Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Entergy Corp's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. 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. Entergy 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 Entergy Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Entergy Corp's revenue has increased by approximately 6.60% per year on average, a rate that underperforms approximately 55.69% 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, Entergy Corp's earnings increased by approximately -13.30% per year on average, a rate that underperforms approximately 77.19% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 2.60%, which underperforms approximately 57.83% of global competitors.
Next Steps
In conclusion, Entergy Corp's dividend payments and growth rate demonstrate a commitment to returning value to shareholders, underscored by a respectable payout ratio and profitability rank. However, the company's growth metrics, particularly in earnings and EBITDA, suggest that investors should keep an eye on future performance to ensure the continuation of healthy dividend increments. As Entergy Corp navigates the evolving energy sector, value investors should weigh these factors in their investment decisions. Will Entergy Corp's strategic initiatives align with industry trends to further bolster its dividend profile? That remains a key question for shareholders.
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.
