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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
MGE in Focus
Based in Madison, MGE (MGEE - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 9.84%. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 2.11%. In comparison, the Utility - Electric Power industry's yield is 3.59%, while the S&P 500's yield is 1.66%.
In terms of dividend growth, the company's current annualized dividend of $1.63 is up 2.5% from last year. Over the last 5 years, MGE has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.64%. 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 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MGEE expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $3.37 per share, representing a year-over-year earnings growth rate of 9.77%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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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This is Why MGE (MGEE) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
MGE in Focus
Based in Madison, MGE (MGEE - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 9.84%. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 2.11%. In comparison, the Utility - Electric Power industry's yield is 3.59%, while the S&P 500's yield is 1.66%.
In terms of dividend growth, the company's current annualized dividend of $1.63 is up 2.5% from last year. Over the last 5 years, MGE has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.64%. 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 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MGEE expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $3.37 per share, representing a year-over-year earnings growth rate of 9.77%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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).