WEC Energy Group's (NYSE:WEC) Upcoming Dividend Will Be Larger Than Last Year's
WEC Energy Group, Inc.'s (NYSE:WEC) periodic dividend will be increasing on the 1st of March to $0.78, with investors receiving 7.2% more than last year's $0.728. Based on this payment, the dividend yield for the company will be 3.0%, which is fairly typical for the industry.
View our latest analysis for WEC Energy Group
WEC Energy Group's Earnings Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, WEC Energy Group's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. 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.
Over the next year, EPS is forecast to expand by 18.2%. If the dividend continues on this path, the payout ratio could be 61% by next year, which we think can be pretty sustainable going forward.
WEC Energy Group Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $1.20, compared to the most recent full-year payment of $2.91. This implies that the company grew its distributions at a yearly rate of about 9.3% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
The Dividend Has Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that WEC Energy Group has grown earnings per share at 7.4% 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.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think WEC Energy Group's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for WEC Energy Group you should be aware of, and 1 of them is a bit unpleasant. Is WEC Energy Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
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