On the 28 September 2018, Eversource Energy (NYSE:ES) will be paying shareholders an upcoming dividend amount of US$0.51 per share. However, investors must have bought the company’s stock before 20 September 2018 in order to qualify for the payment. That means you have only 2 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Eversource Energy’s latest financial data to analyse its dividend characteristics.
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How well does Eversource Energy fit our criteria?
Eversource Energy has a trailing twelve-month payout ratio of 61.6%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect ES’s payout to remain around the same level at 61.8% of its earnings, which leads to a dividend yield of around 3.4%. Furthermore, EPS should increase to $3.37.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. ES has increased its DPS from $0.85 to $2.02 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Eversource Energy generates a yield of 3.2%, which is on the low-side for Electric Utilities stocks.
Taking into account the dividend metrics, Eversource Energy ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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 key aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for ES’s future growth? Take a look at our free research report of analyst consensus for ES’s outlook.
- Historical Performance: What has ES’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other 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 past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.