NRG Energy Inc's Dividend Analysis
Assessing the Sustainability of NRG Energy Inc's Upcoming Dividend
NRG Energy Inc (NYSE:NRG) recently announced a dividend of $0.41 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-31. 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 NRG Energy Inc's dividend performance and assess its sustainability.
What Does NRG Energy Inc Do?
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NRG Energy is one of the largest retail energy providers in the U.S., with 5.5 million customers. Its 2023 acquisition of Vivint Smart Home adds 1.9 million home services customers. NRG also is one of the largest U.S. independent power producers, with 13 gigawatts of coal, gas, and oil power generation capacity primarily in Texas. NRG exited Chapter 11 bankruptcy as a stand-alone entity in December 2003.
A Glimpse at NRG Energy Inc's Dividend History
NRG Energy Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down NRG Energy Inc's Dividend Yield and Growth
As of today, NRG Energy Inc currently has a 12-month trailing dividend yield of 2.75% and a 12-month forward dividend yield of 2.96%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, NRG Energy Inc's annual dividend growth rate was 126.80%. Extended to a five-year horizon, this rate decreased to 86.10% per year. And over the past decade, NRG Energy Inc's annual dividends per share growth rate stands at an impressive 12.60%.
Based on NRG Energy Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NRG Energy Inc stock as of today is approximately 61.39%.
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 2023-09-30, NRG Energy Inc's dividend payout ratio is 0.00.
NRG Energy Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NRG Energy Inc's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 6 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. NRG Energy 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 NRG Energy Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NRG Energy Inc's revenue has increased by approximately 53.20% per year on average, a rate that outperforms approximately 86.85% 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, NRG Energy Inc's earnings increased by approximately -28.70% per year on average, a rate that outperforms approximately 15.06% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 31.40%, which outperforms approximately 84.54% of global competitors.
Next Steps
In conclusion, NRG Energy Inc's upcoming dividend payment, along with its historical dividend growth and favorable yield on cost, paints a picture of a company committed to returning value to shareholders. The payout ratio, currently at 0.00, indicates a conservative approach to dividend distribution, ensuring funds for future operations and growth. Coupled with a profitability rank that signifies steady earnings and growth metrics that showcase a strong revenue model and above-average EBITDA growth, NRG Energy Inc appears well-positioned to maintain its dividend payments. Investors should, however, keep an eye on the EPS growth rate and any potential market changes that could impact the company's financial health. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium offers the High Dividend Yield Screener as a valuable resource.
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.
