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Why NRG Energy (NRG) is a Great Dividend Stock Right Now
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
NRG Energy in Focus
NRG Energy (NRG - Free Report) is headquartered in Houston, and is in the Utilities sector. The stock has seen a price change of 21.06% since the start of the year. The power company is currently shelling out a dividend of $0.38 per share, with a dividend yield of 3.92%. This compares to the Utility - Electric Power industry's yield of 3.74% and the S&P 500's yield of 1.71%.
Looking at dividend growth, the company's current annualized dividend of $1.51 is up 7.9% from last year. Over the last 5 years, NRG Energy has increased its dividend 4 times on a year-over-year basis for an average annual increase of 88.27%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NRG's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.
NRG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.51 per share, which represents a year-over-year growth rate of 72.14%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, NRG 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 NRG Energy (NRG) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
NRG Energy in Focus
NRG Energy (NRG - Free Report) is headquartered in Houston, and is in the Utilities sector. The stock has seen a price change of 21.06% since the start of the year. The power company is currently shelling out a dividend of $0.38 per share, with a dividend yield of 3.92%. This compares to the Utility - Electric Power industry's yield of 3.74% and the S&P 500's yield of 1.71%.
Looking at dividend growth, the company's current annualized dividend of $1.51 is up 7.9% from last year. Over the last 5 years, NRG Energy has increased its dividend 4 times on a year-over-year basis for an average annual increase of 88.27%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NRG's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.
NRG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.51 per share, which represents a year-over-year growth rate of 72.14%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, NRG 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).