OGE Energy Corp's Dividend Analysis
Assessing the Sustainability of OGE Energy Corp's Dividend
OGE Energy Corp (NYSE:OGE) recently announced a dividend of $0.42 per share, payable on 2024-01-26, with the ex-dividend date set for 2024-01-05. 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 OGE Energy Corp's dividend performance and assess its sustainability.
What Does OGE Energy Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
OGE Energy is a holding company for Oklahoma Gas & Electric, a regulated utility with electricity generation, transmission, and distribution to 900,000 customers in Oklahoma and western Arkansas. In December 2021, OGE divested its 25.5% stake in Enable Midstream Partners, an oil and gas services company it created in 2013 through a unit exchange merger with Energy Transfer. OGE sold its 95.4 million limited partner units of Energy Transfer throughout 2022. OGE sold its retail gas business in 1928 and no longer has any gas operations.
A Glimpse at OGE Energy Corp's Dividend History
OGE Energy Corp has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down OGE Energy Corp's Dividend Yield and Growth
As of today, OGE Energy Corp currently has a 12-month trailing dividend yield of 4.70% and a 12-month forward dividend yield of 4.73%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, OGE Energy Corp's annual dividend growth rate was 11.50%. Extended to a five-year horizon, this rate increased to 13.70% per year. And over the past decade, OGE Energy Corp's annual dividends per share growth rate stands at an impressive 10.40%.
Based on OGE Energy Corp's dividend yield and five-year growth rate, the 5-year yield on cost of OGE Energy Corp stock as of today is approximately 8.93%.
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, OGE Energy Corp's dividend payout ratio is 0.80, which may suggest that the company's dividend may not be sustainable.
OGE Energy Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks OGE Energy Corp's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 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. OGE Energy Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. OGE Energy Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. OGE Energy Corp's revenue has increased by approximately 14.80% per year on average, a rate that outperforms approximately 73.2% 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, OGE Energy Corp's earnings increased by approximately 15.40% per year on average, a rate that outperforms approximately 71.79% of global competitors.
Concluding Thoughts on OGE Energy Corp's Dividends
In conclusion, OGE Energy Corp's dividend history and recent performance suggest a company committed to rewarding its shareholders. With a solid track record of dividend payments, an impressive growth rate in dividends per share, and a forward-looking yield that signals confidence, OGE Energy Corp stands out as a potentially attractive option for income-focused investors. However, the sustainability of these dividends is contingent upon maintaining a reasonable payout ratio and ensuring continued profitability and growth. Investors should keep an eye on these metrics, as they will be crucial in determining the company's ability to maintain or increase its dividend payments over time. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
