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Why MGE (MGEE) is a Top Dividend Stock for Your Portfolio
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
MGE in Focus
MGE (MGEE - Free Report) is headquartered in Madison, and is in the Utilities sector. The stock has seen a price change of -7.08% since the start of the year. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 2.27%. In comparison, the Utility - Electric Power industry's yield is 3.33%, while the S&P 500's yield is 1.45%.
Looking at dividend growth, the company's current annualized dividend of $1.48 is up 2.4% from last year. MGE has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.75%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. MGE's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MGEE expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $2.86 per share, representing a year-over-year earnings growth rate of 10%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MGEE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why MGE (MGEE) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
MGE in Focus
MGE (MGEE - Free Report) is headquartered in Madison, and is in the Utilities sector. The stock has seen a price change of -7.08% since the start of the year. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 2.27%. In comparison, the Utility - Electric Power industry's yield is 3.33%, while the S&P 500's yield is 1.45%.
Looking at dividend growth, the company's current annualized dividend of $1.48 is up 2.4% from last year. MGE has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.75%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. MGE's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MGEE expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $2.86 per share, representing a year-over-year earnings growth rate of 10%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MGEE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).