Assessing the Sustainability of NRG Energy Inc's Upcoming Dividend Payment
NRG Energy Inc (NRG, Financial) recently announced a dividend of $0.41 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-04-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into NRG Energy Inc's dividend performance and assess its sustainability.
What Does NRG Energy Inc Do?
NRG Energy Inc is one of the largest retail energy providers in the US, serving 6 million customers. Following its acquisition of Vivint Smart Home in 2023, NRG expanded its customer base to include 2 million home services customers. Additionally, NRG Energy Inc stands as one of the largest independent power producers in the US, boasting 13 gigawatts of coal, gas, and oil power generation capacity, primarily located in Texas. The company has a history of resilience, having emerged from Chapter 11 bankruptcy as a stand-alone entity in December 2003.
A Glimpse at NRG Energy Inc's Dividend History
NRG Energy Inc has upheld a steady dividend payment track record since 2012, distributing dividends on a quarterly basis. Below is a chart displaying annual Dividends Per Share to trace historical trends.
Breaking Down NRG Energy Inc's Dividend Yield and Growth
As of today, NRG Energy Inc currently has a 12-month trailing dividend yield of 2.12% and a 12-month forward dividend yield of 2.24%. This indicates an expectation of increased dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 8.00%. This growth rate jumps to 77.70% per year when extended to a five-year period, and over the past decade, NRG Energy Inc's annual dividends per share growth rate is a notable 15.20%.
Based on NRG Energy Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NRG Energy Inc stock as of today is approximately 37.56%.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, it is crucial to examine the company's payout ratio. The dividend payout ratio reflects the percentage of earnings distributed as dividends. A lower ratio indicates that the company retains a larger portion of its earnings, which can be used for future growth or to weather economic downturns. As of 2023-12-31, NRG Energy Inc's dividend payout ratio is not applicable.
NRG Energy Inc's profitability rank is another metric to consider, providing insight into the company's earnings capability relative to its competitors. With a profitability rank of 6 out of 10 as of 2023-12-31, NRG Energy Inc displays fair profitability, having reported net profit in 6 out of the past 10 years.
Growth Metrics: The Future Outlook
The sustainability of dividends also hinges on a company's growth metrics. NRG Energy Inc's growth rank of 6 out of 10 suggests a fair growth outlook. Revenue, being the lifeblood of any company, is another critical factor, and NRG Energy Inc's revenue per share, along with the 3-year revenue growth rate, indicates a strong revenue model. The company's revenue has grown by approximately 50.70% per year on average, outperforming about 87.26% of global competitors.
Engaging Conclusion
In conclusion, NRG Energy Inc's consistent dividend history, promising yield and growth rates, and fair profitability and growth metrics paint a picture of a company with a sustainable dividend profile. While the current payout ratio is not applicable, the company's financial health and strategic position in the energy sector may provide the stability and potential for future dividend growth. Value investors considering NRG Energy Inc should weigh these factors as they assess the long-term benefits of holding the stock in their portfolios. Could NRG Energy Inc be the next addition to your dividend income strategy? GuruFocus Premium users can further explore high-dividend yield opportunities using the High Dividend Yield Screener.
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.
