FirstEnergy Corp's Dividend Analysis
An Examination of FirstEnergy Corp's Dividend Performance and Sustainability
FirstEnergy Corp (NYSE:FE) recently announced a dividend of $0.41 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-11-06. As investors anticipate this upcoming payment, it's important to delve into the company's dividend history, yield, and growth rates. Leveraging data from GuruFocus, we will examine FirstEnergy Corp's dividend performance and assess its sustainability.
What Does FirstEnergy Corp Do?
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FirstEnergy Corp is an investor-owned holding company with 10 regulated distribution utilities across six mid-Atlantic and Midwestern states. The company also owns and operates one of the nation's largest electric transmission systems.
A Glimpse at FirstEnergy Corp's Dividend History
FirstEnergy Corp has consistently distributed dividend payments since 1998, with dividends currently issued on a quarterly basis.
Breaking Down FirstEnergy Corp's Dividend Yield and Growth
As of today, FirstEnergy Corp boasts a 12-month trailing dividend yield of 4.24% and a 12-month forward dividend yield of 4.45%, indicating an expected increase in dividend payments over the next 12 months.
Over the past three years, FirstEnergy Corp's annual dividend growth rate was 0.90%, which increased to 1.90% per year over a five-year horizon. However, the company's annual dividends per share growth rate has declined by -2.50% over the past decade.
Considering FirstEnergy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of FirstEnergy Corp stock as of today is approximately 4.66%.
The Sustainability Question: Payout Ratio and Profitability
Assessing the sustainability of a company's dividend requires an evaluation of its payout ratio. The dividend payout ratio indicates the proportion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, which can be used for future growth and to buffer against unexpected downturns. As of 2023-09-30, FirstEnergy Corp's dividend payout ratio is 1.64, suggesting potential concerns about the sustainability of the company's dividend.
FirstEnergy Corp's profitability rank provides insights into the company's earning capabilities relative to its competitors. As of 2023-09-30, FirstEnergy Corp's profitability ranks at 6 out of 10, indicating fair profitability. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
For a company to sustain its dividends, robust growth metrics are essential. FirstEnergy Corp's growth rank of 6 out of 10 suggests a fair growth outlook.
Revenue, the lifeblood of any company, combined with FirstEnergy Corp's revenue per share and 3-year revenue growth rate, indicates a strong revenue model. However, the company's revenue has increased by approximately 2.30% per year on average, underperforming approximately 75.51% of global competitors.
The company's 3-year EPS growth rate provides insights into its ability to grow its earnings, a critical component for sustaining dividends in the long run. Over the past three years, FirstEnergy Corp's earnings have increased by approximately -17.30% per year on average, underperforming approximately 80.95% of global competitors.
Conclusion
While FirstEnergy Corp has a consistent history of dividend payments, its current payout ratio and growth metrics raise concerns about the sustainability of its dividends in the future. Investors should consider these factors alongside the company's profitability and revenue growth when making investment decisions.
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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.
