FirstEnergy Corp's Dividend Analysis
Assessing the Sustainability and Growth of FirstEnergy Corp's Dividends
FirstEnergy Corp (NYSE:FE) recently announced a dividend of $0.41 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-06. 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 FirstEnergy Corp's dividend performance and assess its sustainability.
What Does FirstEnergy Corp Do?
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FirstEnergy is an investor-owned holding company with 10 regulated distribution utilities across six mid-Atlantic and Midwestern states. FirstEnergy also owns and operates one of the nation's largest electric transmission systems.
A Glimpse at FirstEnergy Corp's Dividend History
FirstEnergy Corp has maintained a consistent dividend payment record since 1998, currently distributing dividends on a quarterly basis. The company has increased its dividend each year since 2014, earning it the status of a dividend achiever, a title reserved for companies with at least a decade of consecutive dividend increases.
Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down FirstEnergy Corp's Dividend Yield and Growth
FirstEnergy Corp currently has a trailing dividend yield of 4.29% and a forward dividend yield of 4.46%. This indicates an anticipated increase in dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 0.90%, which expanded to 1.90% over a five-year period. However, the ten-year annual dividends per share growth rate stands at -2.50%.
Based on FirstEnergy Corp's dividend yield and five-year growth rate, the 5-year yield on cost for FirstEnergy Corp stock is approximately 4.71%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one must evaluate the company's payout ratio. FirstEnergy Corp's dividend payout ratio is currently 1.54, which may suggest that the company's dividend could be at risk. The company's profitability rank, which stands at 6 out of 10, indicates fair profitability, with net profit reported in 8 out of the past 10 years.
Growth Metrics: The Future Outlook
FirstEnergy Corp's growth rank of 6 out of 10 suggests a fair growth outlook. The company's revenue per share, combined with a 3-year revenue growth rate, indicates a strong revenue model, growing at an average rate of 2.30% per year. However, this rate underperforms approximately 75.98% of global competitors. Additionally, FirstEnergy Corp's 3-year EPS growth rate, a critical component for sustaining dividends, decreased by an average of -17.30% per year, underperforming approximately 80.41% of global competitors.
Engaging Conclusion
Considering FirstEnergy Corp's consistent dividend payments, modest growth rate, and challenging payout ratio, investors should weigh these factors carefully when evaluating the stock's dividend prospects. While the company's profitability and growth ranks indicate stability, the negative EPS growth rate and high payout ratio may raise concerns about the long-term sustainability of dividend increases. Value investors may find it prudent to keep a close eye on FirstEnergy Corp's future earnings reports and strategic initiatives to better gauge the potential for continued dividend growth. For those seeking high-dividend yield opportunities, GuruFocus Premium offers a High Dividend Yield Screener to discover similar investment prospects.
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.
