Is Exelon Corporation (NYSE:EXC) A Smart Choice For Dividend Investors?
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Over the past 10 years, Exelon Corporation (NYSE:EXC) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Exelon should have a place in your portfolio. Check out our latest analysis for Exelon
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is their annual yield among the top 25% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Exelon fit our criteria?
Exelon has a trailing twelve-month payout ratio of 32.91%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect EXC’s payout to increase to 51.22% of its earnings, which leads to a dividend yield of 3.78%. However, EPS is forecasted to fall to $3.08 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Exelon fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Compared to its peers, Exelon has a yield of 3.62%, which is on the low-side for Electric Utilities stocks.
Next Steps:
Whilst there are few things you may like about Exelon from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three essential aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for EXC’s future growth? Take a look at our free research report of analyst consensus for EXC’s outlook.
Valuation: What is EXC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether EXC is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
