Last update on 2024-06-27

Public Service Enterprise Group (PEG) - Dividend Analysis (Final Score: 4/8)

Explore in-depth the dividend sustainability and financial health of Public Service Enterprise Group (PEG) with a comprehensive 8-criteria analysis scoring PEG 4/8.

Short Analysis - Dividend Score: 4

We're running Public Service Enterprise Group (PEG) 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 measures the annual dividends paid by a company relative to its stock price.

Public Service Enterprise Group (PEG) currently has a dividend yield of 3.7285%, which is slightly lower than the industry average of 3.75%. Historically, PEG's dividend yield has been volatile, ranging from a high of 4.9315% in 2003 to a low of 2.3819% in 2007. Over the last 20 years, the yield has generally remained competitive, often surpassing industry averages, particularly during periods of economic downturn. Recently, it has hovered around the industry average, making it a neutral indicator. While dividend yields this close to the industry average are neither particularly advantageous nor detrimental, investors might look for consistent upward trends which are not evident here. However, PEG’s trajectory towards aligning with industry trends, paired with its robust annual dividends and consistent stock price growth, underscores its resilience and enduring market presence.

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

The dividend growth rate measures the percentage increase in the dividend paid by a company over a period. It is crucial as it reflects the company's ability to generate higher returns for its shareholders over time.

Examining PEG’s dividend data over the last 20 years, we note the variations in annual dividends paid per share. The specific years with conspicuously high ratios such as 2008 (10.4274) and 2015 (5.4054) indicate significant increases. Despite fluctuations, particularly in years without dividends (e.g., 2003 and 2011), the rising trend is evident, especially in recent years with ratios consistently above the average dividend of 3.6467%. This suggests a positive long-term growth trend with resilience and reactive dividend policies benefiting shareholders. Hence, PEG demonstrates a commendable growth rate, indicating a good performance by this criterion.

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

Explain the criterion for Public Service Enterprise Group (PEG) and why it is important to consider

A Payout Ratio below 65% is typically considered sustainable for a utility company such as Public Service Enterprise Group (PEG). This metric is essential because it measures the proportion of earnings paid out as dividends to shareholders, indicating the company's dividend sustainability and financial health over time.

Dividends Well Covered by Earnings?

Explain the criterion for Public Service Enterprise Group (PEG) and why it is important to consider

Earnings per share (EPS) and dividends per share (DPS) are crucial in dividend analyses. EPS indicates a company's profitability and its ability to generate earnings for shareholders. DPS shows the portion of earnings distributed as dividends. The ratio of dividends covered by earnings per share tells us how comfortably a company can pay its dividends from its profits. A higher ratio signifies better coverage and indicates sustainability of dividend payments. This criterion is vital for assessing the financial health and stability of a company's dividend policy.

Dividends Well Covered by Cash Flow?

Evaluating whether dividends are well-covered by free cash flow (FCF) is crucial as it indicates the sustainability of dividend payments without the need for external financing or debt.

Public Service Enterprise Group (PEG)'s free cash flow (FCF) coverage of dividends has shown significant variability over the years. In some years, such as 2003 (5.14) and 2020 (14.57), the company had robust FCF coverage, suggesting strong dividend sustainability. However, in other years like 2015 (-0.84) and 2018 (0.28), the coverage was negative or extremely low, demonstrating potential financial stress and risk to dividend payments. A sustainable trend would ideally show consistently high coverage ratios close to or above 1. The erratic trend at PEG, with dramatic swings including several negative ratios, indicates unreliable FCF coverage and potential challenges in consistently financing dividends, representing a red flag for investors focused on reliable income from dividends.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividends are a hallmark for dividend investors as they indicate the reliability and financial health of the company, ensuring a steady income stream.

Public Service Enterprise Group (PEG) has shown remarkable stability in its dividend payments over the past 20 years. The data showcases a consistent increase from $1.08 in 2003 to $2.28 in 2023, which translates to an overall growth of 111%. Importantly, there were no instances where the dividend per share dropped by more than 20% in any given year, thus underlining PEG's commitment to providing a reliable income stream for its investors. This trend is notably favorable for income-seeking investors looking for dependable dividend payments.

Dividends Paid for Over 25 Years?

Examining whether a company has consistently paid dividends for over 25 years can provide insight into its commitment to returning value to shareholders. This criterion is crucial as it reflects the company's financial stability and long-term profitability, signaling dependable income for investors.

Public Service Enterprise Group (PEG) has paid dividends consistently for the past 25 years, with visible increments in its dividend per share over time. From a dividend of $1.08 in 1998, it has risen to $2.28 in 2023. This consistent payment and growth suggest a strong, stable, and increasingly profitable business. For long-term investors, maintaining or increasing dividends over such an extended period is a positive indicator of the company's potential for sustainable returns and financial health. The upward trend, especially notable post-2008, indicates solid growth and resilience amidst economic fluctuations.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluating reliable stock repurchases involves assessing a company's history of buying back its shares. This indicates management’s confidence in the company's prospects and can enhance shareholder value by reducing the number of shares outstanding, thereby increasing EPS.

Over the past 20 years, Public Service Enterprise Group (PEG) has fluctuated in its share repurchases, evidenced by the number of shares outstanding. The data shows specific years where reliable repurchases occurred, notably in 2008, 2009, 2010, 2011, 2017, 2019, and 2022. However, these are exceptions rather than a consistent trend. For instance, the company had no considerable share buyback from 2012 to 2016, and shares remained almost constant at around 508,000,000. Only slight buyback activity appeared for the other years. The average repurchase of 0.4315 signifies minimal share buyback activity, which suggests that PEG's share repurchase strategy hasn’t been aggressively focused on return enhancement. Overall, while intermittent buybacks were seen, they were not significant enough to denote a strong trend in regular repurchases. This could be interpreted as a neutral signal – the company's repurchase activities have been moderate but not stellar for growth-driven investors.