Avangrid Inc (NYSE:AGR) pays $0.44 dividend
Avangrid, Inc. (NYSE: AGR) will pay a dividend of $0.44 on October 3. Based on this payout, the dividend yield on the company’s stock will be 3.9%, which is an attractive increase in returns for shareholders.
Avangrid payment has strong income coverage
If the payouts aren’t sustainable, a high return for a few years won’t matter much. The last dividend was a pretty big chunk of free cash flow, and that was made worse by the lack of free cash flow. We think this practice can make the dividend quite risky in the future.
EPS is expected to grow 13.0% over the next year. If recent dividend trends continue, the 12-month payout rate could be 78%, which is a bit high but can certainly be sustainable.
Avangrid is still building its balance sheet
Avangrid’s dividend has been fairly stable for a little while now, but we’ll remain cautious until it’s proven for a few more years. The annual payment over the past 6 years was $1.73 in 2016, and the most recent year payment was $1.76. Dividend payouts increased, but very slowly over the period. Avangrid hasn’t been paying a dividend for a very long time, so we wouldn’t be excited about its record growth just yet.
Dividend growth prospects are limited
Investors who have held shares of the company for the past few years will be pleased with the dividend income they have received. Let’s not jump to conclusions, because things might not be as good as they seem on the surface. Avangrid hasn’t seen much change in its earnings per share over the past five years.
Avangrid’s dividend doesn’t look sustainable
Overall, it’s nice to see consistent dividend payout, but we believe that over the longer term, the current level of payout may be unsustainable. The track record isn’t great and the payouts are a bit high to be considered sustainable. This company is not in the high end of income providing stocks.
It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic one. However, there are other things for investors to consider when analyzing stock performance. For example, we chose 1 warning sign for Avangrid that investors should consider. If you are a dividend investor, you can also consult our curated list of high yielding dividend stocks.
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