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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.
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
Headquartered in Madison, MGE (MGEE - Free Report) is a Utilities stock that has seen a price change of -1.15% so far this year. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 2.34%. In comparison, the Utility - Electric Power industry's yield is 3.29%, while the S&P 500's yield is 1.76%.
In terms of dividend growth, the company's current annualized dividend of $1.63 is up 2.5% 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 4.88%. 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. MGE's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.
MGEE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.50 per share, which represents a year-over-year growth rate of 14.01%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that MGEE is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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MGE (MGEE) Could Be a Great Choice
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.
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
Headquartered in Madison, MGE (MGEE - Free Report) is a Utilities stock that has seen a price change of -1.15% so far this year. Currently paying a dividend of $0.41 per share, the company has a dividend yield of 2.34%. In comparison, the Utility - Electric Power industry's yield is 3.29%, while the S&P 500's yield is 1.76%.
In terms of dividend growth, the company's current annualized dividend of $1.63 is up 2.5% 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 4.88%. 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. MGE's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.
MGEE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.50 per share, which represents a year-over-year growth rate of 14.01%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that MGEE is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).