OGE Energy (NYSE:OGE) Has Announced A Dividend Of $0.425
OGE Energy Corp. (NYSE:OGE) has announced that it will pay a dividend of $0.425 per share on the 30th of January. This payment means that the dividend yield will be 3.9%, which is around the industry average.
OGE Energy's Future Dividend Projections Appear Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, OGE Energy's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
The next year is set to see EPS grow by 9.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 67% by next year, which is in a pretty sustainable range.
View our latest analysis for OGE Energy
OGE 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 $1.00 in 2015 to the most recent total annual payment of $1.70. This works out to be a compound annual growth rate (CAGR) of approximately 5.4% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
OGE Energy Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that OGE Energy has been growing its earnings per share at 7.1% a year over the past five years. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.
Our Thoughts On OGE Energy's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about OGE Energy's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for OGE Energy (1 shouldn't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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