WEC Energy Group (NYSE:WEC) Has Announced That It Will Be Increasing Its Dividend To US$0.73
WEC Energy Group, Inc. (NYSE:WEC) will increase its dividend on the 1st of March to US$0.73. Based on the announced payment, the dividend yield for the company will be 2.9%, which is fairly typical for the industry.
Check out our latest analysis for WEC Energy Group
WEC Energy Group's Earnings Easily Cover the Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, WEC Energy Group's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Looking forward, earnings per share is forecast to rise by 4.3% over the next year. If the dividend continues on this path, the payout ratio could be 69% by next year, which we think can be pretty sustainable going forward.
WEC Energy Group Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the first annual payment was US$1.04, compared to the most recent full-year payment of US$2.91. This means that it has been growing its distributions at 11% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Has Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. WEC Energy Group has impressed us by growing EPS at 6.7% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.
Our Thoughts On WEC Energy Group's Dividend
Overall, we always like to see the dividend being raised, but we don't think WEC Energy Group will make a great income stock. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, WEC Energy Group has 2 warning signs (and 1 which is concerning) we think you should know about. We have also put together a list of global stocks with a solid dividend.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
