An In-depth Look at Upcoming Dividends and Historical Performance
FirstEnergy Corp (FE, Financial) recently announced a dividend of $0.43 per share, payable on June 1, 2024, with the ex-dividend date set for May 6, 2024. As investors anticipate this forthcoming payment, it is crucial to explore the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, this article delves into FirstEnergy Corp's dividend track record and evaluates its sustainability.
What Does FirstEnergy Corp Do?
FirstEnergy is an investor-owned holding company that operates 10 regulated distribution utilities across six mid-Atlantic and Midwestern states. Additionally, FirstEnergy owns and operates one of the nation's largest electric transmission systems, playing a crucial role in the U.S. energy sector.
A Glimpse at FirstEnergy Corp's Dividend History
FirstEnergy Corp has upheld a consistent dividend payment record since 1998, distributing dividends quarterly. Since 2014, the company has increased its dividend annually, earning it the status of a dividend achiever—a distinction awarded to companies that have raised their dividends annually for at least the past 10 years.
Below is a chart illustrating the annual Dividends Per Share to track historical trends.
Breaking Down FirstEnergy Corp's Dividend Yield and Growth
Currently, FirstEnergy Corp boasts a 12-month trailing dividend yield of 4.08% and a 12-month forward dividend yield of 4.33%, indicating anticipated increases in dividend payments over the next year. Over the past three years, the company's annual dividend growth rate was 0.40%, which expanded to 1.60% per year over five years. However, the decade-long annual dividends per share growth rate stands at -0.80%.
As of today, the 5-year yield on cost for FirstEnergy Corp stock is approximately 4.42%.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, it is essential to consider the company's payout ratio. The dividend payout ratio of 0.83 as of March 31, 2024, suggests that a significant portion of earnings is distributed as dividends, which may raise concerns about sustainability. FirstEnergy Corp's profitability rank is 6 out of 10, indicating fair profitability, with net profits reported in 8 of the past 10 years.
Growth Metrics: The Future Outlook
Robust growth metrics are essential for sustaining dividends. FirstEnergy Corp's growth rank of 6 suggests a fair growth outlook. The company's revenue per share and 3-year revenue growth rate of approximately 4.10% per year indicate a strong revenue model, albeit underperforming about 69.62% of global competitors. The 3-year EPS growth rate of about 2.80% per year and the 5-year EBITDA growth rate of 1.90% also reflect potential underperformance relative to global peers.
Conclusion
While FirstEnergy Corp has demonstrated a strong dividend history and a promising yield, the sustainability of its dividends, given its payout ratio and mixed growth metrics, warrants careful consideration. Investors should weigh these factors alongside the company's strategic initiatives and competitive position within the industry. For those seeking high-dividend yield opportunities, consider using the High Dividend Yield Screener available to GuruFocus Premium users.
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.
