Yahoo Finance Duke Energy (NYSE:DUK) Will Pay A Larger Dividend Than Last Year At $1.05
Duke Energy Corporation (NYSE:DUK) will increase its dividend on the 16th of September to $1.05, which is 2.0% higher than last year's payment from the same period of $1.02. This makes the dividend yield about the same as the industry average at 3.8%.
Check out our latest analysis for Duke Energy
Duke Energy's Earnings Easily Cover The Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. The last dividend made up quite a large portion of free cash flows, and this was made worse by the lack of free cash flows. Generally, we think that this would be a risky long term practice.
Looking forward, earnings per share is forecast to rise by 23.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 61% by next year, which is in a pretty sustainable range.
Duke Energy Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $3.12 in 2014 to the most recent total annual payment of $4.10. This implies that the company grew its distributions at a yearly rate of about 2.8% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
We Could See Duke Energy's Dividend Growing
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Duke Energy has impressed us by growing EPS at 6.4% per year over the past five years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.
Our Thoughts On Duke Energy's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Duke Energy (of which 1 is a bit concerning!) you should know about. Is Duke Energy 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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