Eversource Energy (NYSE:ES) Is Increasing Its Dividend To $0.675
The board of Eversource Energy (NYSE:ES) has announced that the dividend on 31st of March will be increased to $0.675, which will be 5.9% higher than last year's payment of $0.638 which covered the same period. This makes the dividend yield about the same as the industry average at 3.2%.
Check out our latest analysis for Eversource Energy
Eversource Energy's Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Eversource Energy was earning enough to cover the dividend, but it wasn't generating any free cash flows. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.
The next year is set to see EPS grow by 22.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 56% by next year, which is in a pretty sustainable range.
Eversource Energy Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $1.18 in 2013, and the most recent fiscal year payment was $2.55. This means that it has been growing its distributions at 8.1% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Eversource Energy Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. Eversource Energy has seen EPS rising for the last five years, at 5.3% per annum. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.
Our Thoughts On Eversource Energy's Dividend
Overall, we always like to see the dividend being raised, but we don't think Eversource Energy will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Eversource Energy (1 is significant!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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