Last update on 2024-06-28

Evergy (EVRG) - Dividend Analysis (Final Score: 6/8)

Comprehensive dividend analysis of Evergy (EVRG) with an overall score of 6/8. Discover the performance and stability of Evergy's dividend policy.

Short Analysis - Dividend Score: 6

We're running Evergy (EVRG) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend Yield represents the dividend income, expressed as a percentage of the current share price, that shareholders can expect to receive from their investment.

Evergy's current dividend yield of 4.7548% is significantly higher than the industry average of 3.12%. Over the past 20 years, Evergy's dividend yield has frequently been above the industry average, except for a few years when it dipped below average. This consistency indicates a strong and stable dividend payout history, which is attractive to income-focused investors. For example, the dividend yield in 2023 is over 1.6% higher than the industry average, reinforcing Evergy's position as a high-yield utility stock. Coupled with increasing dividend per share figures, growing from $0.76 in 2003 to $2.482 in 2023, the trend is positive for dividend investors.

Average annual Growth Rate higher than 5% in the last 20 years?

The dividend growth rate is the annualized percentage rate of growth of a company's dividend payments. A high dividend growth rate is typically an attractive feature for dividend investors, as it can lead to increased income over time.

Analyzing Evergy's dividend growth rate from 2003 to 2023, we see fluctuating rates with values ranging from -36.6667% to 15%. The average dividend growth rate over this 20-year period is approximately 4.10%, which is below the 5% threshold. This suggests that while Evergy has had some good years of dividend growth, the consistency needed to meet a 5% annual growth benchmark is not there. This trend is not favorable for dividend growth investors who prioritize a stable and high growth rate.

Average annual Payout Ratio lower than 65% in the last 20 years?

The Average Payout Ratio is a measure of a company's dividend payments relative to its net income. A payout ratio below 65% is generally considered healthy as it indicates that the company is retaining enough earnings to invest back into the business while also rewarding shareholders. This ratio is important to investors looking for sustainable and reliable dividends.

The Average Payout Ratio for Evergy (EVRG) over the last 20 years is approximately 55.67%, which is below the 65% threshold. This suggests that Evergy has managed its dividend payments well relative to its net income. However, it is important to note that there were years when the payout ratio exceeded 65%, specifically in 2008, 2009, 2010, 2013, 2015, 2016, 2017, 2018, and 2020. These fluctuations can be a point of concern, indicating periods when the company paid out a higher portion of its earnings as dividends. Despite these occasional spikes, the overall trend stands strong and shows that most of the time, the company has maintained a healthy payout ratio, reassuring investors of its dividend sustainability and financial prudence.

Dividends Well Covered by Earnings?

Dividends being well covered by earnings is crucial as it indicates a company's ability to sustain or grow its dividend payouts without financial strain.

Analyzing Evergy's historical data from 2003 to 2023, we observe that the proportion of dividends covered by earnings (Earnings per Share / Dividend per Share) fluctuated significantly. Most years saw coverage ratios well above 0.6, indicating a generally healthy buffer. For instance, the ratio was as high as 0.7539 in 2009 and 0.7532 in 2020, demonstrating robust earnings relative to dividend payouts during these periods. However, years like 2007 (0.5838), 2015 (0.6807), and more recently 2021 (0.5668) indicate riskier coverage points. Notably, years like 2003, 2004, and 2023 show zero coverage, implying either no earnings or unsustainable dividends. Despite occasional fluctuations, the trend mostly indicates that Evergy’s dividends have been reasonably well covered by its earnings, though vigilant monitoring is warranted in years with lower coverage ratios.

Dividends Well Covered by Cash Flow?

Explain the criterion for Evergy (EVRG) and why it is important to consider

The analysis shows Evergy's (EVRG) free cash flow and dividend payout amounts over the recent years. A key aspect is whether dividends are covered by cash flow to ensure sustainability and avoid leveraging or fund depletion. The free cash flow from 2017 to 2023 depicts a mixed trend with negative values from 2018 onwards, except for 2019, which saw a peculiar increase in cash flow and excessive payout. Such discrepancy raises questions about the sustainability of dividends. If dividends aren't well covered, the company might resort to debt, impacting its financial stability. Times of positive free cash flows like 2017's ratio of 1.5 show good coverage, whereas periods like 2020 to 2023 reveal troubling negative ratios: -1.47 in 2021 to -1.61 in 2023, indicating payouts likely financed by debt or reserves, questioning the long-term viability.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends over a long period indicate the company's consistent financial health and attractiveness to income-seeking investors.

Evergy (EVRG) has demonstrated exceptional stability in its dividend payments over the past 20 years. The dataset shows a consistent yearly increase in dividends per share, from $0.76 in 2003 to $2.482 in 2023. This steady growth without a drop of more than 20% is a positive indicator for investors who prioritize reliable income streams. The absence of significant dividend reductions suggests strong and predictable cash flows, bolstering investor confidence.

Dividends Paid for Over 25 Years?

Determining if a company has paid dividends for over 25 years is crucial in assessing its stability, reliability, and shareholder value. A long history of dividends means the company is likely financially healthy and committed to returning value to shareholders.

Evergy (EVRG) has demonstrated a consistent dividend payout history over the past 25 years. Although there was a dip in the early 2000s, where dividends per share dropped to as low as $0.76 in 2003 from $2.14 in 1998, the company managed to recover and progressively increase its dividends. From 2010 onwards, the dividend per share has shown continuous growth, peaking at $2.482 in 2023, showcasing a robust trend of improving dividend payments. This long-term commitment is a strong indicator of the firm's stability and dedication to shareholder returns, making it a positive trend for investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company's commitment to returning value to shareholders by buying back its own shares, thereby potentially enhancing earnings per share and stock price stability.

Over the last 20 years, Evergy (EVRG) has shown a largely inconsistent approach to stock repurchases, as indicated by the fluctuating number of shares. The significant jumps in shares from 88 million in 2006 to 239.5 million in 2019 show dilution rather than repurchase efforts. Reliable repurchases are noted only in 2020 and 2023, which reflects a meager average repurchase rate of 0.4579. This trend is generally unfavorable for this criterion, as consistent and substantive buyback programs are typically a sign of a financially healthy and shareholder-focused company.