NiSource Inc's Dividend Analysis
Unpacking the Dividend Performance and Sustainability of NiSource Inc (NYSE:NI)
NiSource Inc(NYSE:NI) recently announced a dividend of $0.25 per share, payable on 2023-11-20, with the ex-dividend date set for 2023-10-30. 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 with approximately 3.2 million customers in Indiana, Kentucky, Maryland, Ohio, Pennsylvania, and Virginia. NiSource's electric utility transmits and distributes electricity in northern Indiana to about 500,000 customers. The regulated electric utility also owns more than 3,000 megawatts of generation capacity, most of which is now coal-fired but is being replaced by natural gas and renewable energy.
A Glimpse at NiSource Inc's Dividend History
NiSource Inc has maintained a consistent dividend payment record since 1989. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking 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 3.92% and a 12-month forward dividend yield of 3.98%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, NiSource Inc's annual dividend growth rate was 5.50%. Extended to a five-year horizon, this rate stayed the same. And 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 5.12%.
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 provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, NiSource Inc's dividend payout ratio is 0.67.
NiSource Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NiSource Inc's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported net profit in 8 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. NiSource Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and NiSource Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NiSource Inc's revenue has increased by approximately -1.60% per year on average, a rate that underperforms than approximately 86.01% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, NiSource Inc's earnings increased by approximately 25.00% per year on average, a rate that underperforms than approximately 21.09% of global competitors.
Conclusion
Overall, NiSource Inc's dividend payments, growth rate, payout ratio, profitability, and growth metrics suggest a relatively stable dividend outlook. However, investors should monitor the company's revenue and earnings growth rates, as underperformance compared to global competitors may impact future dividend sustainability. As always, a comprehensive understanding of the company's overall financial health and market position is crucial when considering 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.
