NiSource Inc's Dividend Analysis
Assessing the Sustainability of NiSource Inc's Dividend Payments
NiSource Inc (NYSE:NI) recently announced a dividend of $0.27 per share, payable on 2024-02-20, with the ex-dividend date set for 2024-02-02. 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 look into NiSource Inc's dividend performance and assess its sustainability.
What Does NiSource Inc Do?
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NiSource is one of the nation's largest natural gas distribution companies, serving approximately 3.2 million customers across six states. In addition to its gas distribution operations, NiSource's electric utility provides power to around 500,000 customers in northern Indiana and boasts over 3,000 megawatts of generation capacity, which includes coal, natural gas, and renewable energy sources.
A Glimpse at NiSource Inc's Dividend History
NiSource Inc has maintained a consistent dividend payment record since 1989, distributing dividends quarterly to shareholders. Such a long history of dividend payments reflects the company's commitment to returning value to its investors.
Below is a chart showing the annual Dividends Per Share to track historical trends.
Breaking Down NiSource Inc's Dividend Yield and Growth
As of today, NiSource Inc currently has a 12-month trailing dividend yield of 3.81% and a 12-month forward dividend yield of 4.04%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, NiSource Inc's annual dividend growth rate was 5.50%. This rate remained consistent over a five-year period. However, over the past decade, NiSource Inc's annual dividends per share growth rate stands at -0.80%.
Based on NiSource Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NiSource Inc stock as of today is approximately 4.98%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio is 0.67 as of 2023-09-30, indicating that NiSource Inc distributes a reasonable portion of its earnings as dividends, while retaining funds for growth and downturns.
NiSource Inc's profitability rank is 6 out of 10 as of 2023-09-30, suggesting fair profitability with net profit reported in 8 out of the past 10 years.
Growth Metrics: The Future Outlook
The growth rank of NiSource Inc is 6 out of 10, indicating a fair growth outlook. However, NiSource Inc's revenue per share and 3-year revenue growth rate underperform compared to approximately 86.19% of global competitors, with an average annual decrease of about -1.60%.
The company's 3-year EPS growth rate also underperforms compared to approximately 67.43% of global competitors, with an average annual decrease of about -4.50%.
Concluding Thoughts on NiSource Inc's Dividend Prospects
In conclusion, while NiSource Inc's dividend history is long-standing and its current yields are attractive, the negative growth rates in dividends per share over the past decade and underperformance in revenue and EPS growth raise questions about the long-term sustainability of these dividends. Investors should weigh the company's fair profitability and payout ratio against these growth concerns. For those seeking dividend-paying stocks, GuruFocus Premium offers tools like the High Dividend Yield Screener to discover investment opportunities.
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.
