WEC Energy Group's (NYSE:WEC) Dividend Will Be Increased To $0.78
The board of WEC Energy Group, Inc. (NYSE:WEC) has announced that it will be paying its dividend of $0.78 on the 1st of March, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 3.3%.
See our latest analysis for WEC Energy Group
WEC Energy Group's Payment Has Solid Earnings Coverage
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. 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 18.1% over the next year. 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 2013, the annual payment back then was $1.20, compared to the most recent full-year payment of $3.12. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. 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.
We Could See WEC Energy Group's Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. 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 company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.
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 WEC Energy Group is earning enough to cover the payments, the cash flows are lacking. 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. 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 WEC Energy Group (of which 1 can't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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