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NRG Energy (NRG) Rewards Shareholders With 8% Dividend Hike
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NRG Energy, Inc. (NRG - Free Report) announced that its board of directors has approved an 8% increase in its quarterly dividend rate. The new dividend rate will be 40.75 cents per share compared with the previous quarter’s 37.75 cents, payable on Feb 15, 2024, to stockholders of record as of Feb 1, 2024. This increase is in sync with the company’s previously announced annual dividend growth rate target of 7-9% per share.
This increase resulted in an annualized dividend of $1.63 per share compared with the previous level of $1.51. NRG Energy’s current dividend yield is 2.88%, higher than the Zacks S&P 500 Composite's average of 1.36%.
Can NRG Energy Sustain Dividend Hikes?
In the past few years, NRG Energy has made significant progress in its transformation to an integrated power company. It sells electricity to a wide variety of customers and none of them contributed more than 10% to the company’s revenues. Courtesy of its high-quality services, the company has been able to retain customers and does not depend on a single customer to generate revenues. This adds stability and predictability to customer bills and NRG’s earnings.
Recently, the company completed the sale of its 44% equity interest in South Texas Project Electric Generating Station (“STP”) to Constellation Energy Corporation for $1.75 billion. STP is a 2,645-megawatt nuclear facility located about 90 miles southwest of Houston in Bay City, TX. The net proceeds from the transaction will further enable NRG to reduce debts and increase shareholders’ value.
The company is focused on clean generation to lower emissions. NRG Energy entered into renewable power purchase agreements, totaling nearly 2.4 gigawatts, with third-party project developers and other counterparties. It continues to optimize its generation portfolio by retiring uneconomic fossil fuel plants, monetizing non-core assets and partnering for brownfield development.
NRG Energy has the potential to expand and improve even more, which suggests that management will have sufficient funds to continue its shareholder-friendly activities in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
Recently, Alliant Energy (LNT - Free Report) , WEC Energy Group (WEC - Free Report) and Global Water Resources (GWRS - Free Report) have raised their quarterly dividend rate by 6.1%, 7% and 1%, respectively.
The Zacks Consensus Estimate for Alliant Energy’s 2024 earnings is pegged at $3.08 per share, implying a year-over-year increase of 6.8%. LNT’s current dividend yield is 3.7%.
The Zacks Consensus Estimate for WEC Energy’s 2024 earnings is pegged at $4.90 per share, implying a year-over-year increase of 6.2%. WEC’s current dividend yield is 3.9%.
The Zacks Consensus Estimate for Global Water Resources’ 2024 earnings is pegged at 30 cents per share, implying a year-over-year increase of 3.5%. GWRS’ current dividend yield is 2.48%.
Price Performance
In the past three months, NRG Energy’s shares have risen 29.2% compared with the industry’s growth of 2.9%.
Image: Bigstock
NRG Energy (NRG) Rewards Shareholders With 8% Dividend Hike
NRG Energy, Inc. (NRG - Free Report) announced that its board of directors has approved an 8% increase in its quarterly dividend rate. The new dividend rate will be 40.75 cents per share compared with the previous quarter’s 37.75 cents, payable on Feb 15, 2024, to stockholders of record as of Feb 1, 2024. This increase is in sync with the company’s previously announced annual dividend growth rate target of 7-9% per share.
This increase resulted in an annualized dividend of $1.63 per share compared with the previous level of $1.51. NRG Energy’s current dividend yield is 2.88%, higher than the Zacks S&P 500 Composite's average of 1.36%.
Can NRG Energy Sustain Dividend Hikes?
In the past few years, NRG Energy has made significant progress in its transformation to an integrated power company. It sells electricity to a wide variety of customers and none of them contributed more than 10% to the company’s revenues. Courtesy of its high-quality services, the company has been able to retain customers and does not depend on a single customer to generate revenues. This adds stability and predictability to customer bills and NRG’s earnings.
Recently, the company completed the sale of its 44% equity interest in South Texas Project Electric Generating Station (“STP”) to Constellation Energy Corporation for $1.75 billion. STP is a 2,645-megawatt nuclear facility located about 90 miles southwest of Houston in Bay City, TX. The net proceeds from the transaction will further enable NRG to reduce debts and increase shareholders’ value.
The company is focused on clean generation to lower emissions. NRG Energy entered into renewable power purchase agreements, totaling nearly 2.4 gigawatts, with third-party project developers and other counterparties. It continues to optimize its generation portfolio by retiring uneconomic fossil fuel plants, monetizing non-core assets and partnering for brownfield development.
NRG Energy has the potential to expand and improve even more, which suggests that management will have sufficient funds to continue its shareholder-friendly activities in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
Recently, Alliant Energy (LNT - Free Report) , WEC Energy Group (WEC - Free Report) and Global Water Resources (GWRS - Free Report) have raised their quarterly dividend rate by 6.1%, 7% and 1%, respectively.
The Zacks Consensus Estimate for Alliant Energy’s 2024 earnings is pegged at $3.08 per share, implying a year-over-year increase of 6.8%. LNT’s current dividend yield is 3.7%.
The Zacks Consensus Estimate for WEC Energy’s 2024 earnings is pegged at $4.90 per share, implying a year-over-year increase of 6.2%. WEC’s current dividend yield is 3.9%.
The Zacks Consensus Estimate for Global Water Resources’ 2024 earnings is pegged at 30 cents per share, implying a year-over-year increase of 3.5%. GWRS’ current dividend yield is 2.48%.
Price Performance
In the past three months, NRG Energy’s shares have risen 29.2% compared with the industry’s growth of 2.9%.
Image Source: Zacks Investment Research
Zacks Rank
NRG Energy currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.