Over the past 10 years Eversource Energy (NYSE:ES) has returned an average of 3.0% per year from dividend payouts. The company is currently worth US$19.85b, and now yields roughly 3.2%. Does Eversource Energy tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Eversource Energy pass our checks?
Eversource Energy has a trailing twelve-month payout ratio of 61.6%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 61.9%, leading to a dividend yield of 3.4%. In addition to this, EPS should increase to $3.37.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. ES has increased its DPS from $0.85 to $2.02 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Eversource Energy generates a yield of 3.2%, which is on the low-side for Electric Utilities stocks.
With this in mind, I definitely rank Eversource Energy as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three key factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for ES’s future growth? Take a look at our free research report of analyst consensus for ES’s outlook.
- Historical Performance: What has ES’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.