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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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 8.24%. The public utility holding company is currently shelling out a dividend of $0.41 per share, with a dividend yield of 2.14%. This compares to the Utility - Electric Power industry's yield of 3.26% and the S&P 500's yield of 1.78%.
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 4.83%. Future dividend growth will depend on earnings growth as well as 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 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MGEE for this fiscal year. The Zacks Consensus Estimate for 2023 is $3.37 per share, with earnings expected to increase 9.77% from the year ago period.
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. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, 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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MGE (MGEE) Could Be a Great Choice
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 8.24%. The public utility holding company is currently shelling out a dividend of $0.41 per share, with a dividend yield of 2.14%. This compares to the Utility - Electric Power industry's yield of 3.26% and the S&P 500's yield of 1.78%.
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 4.83%. Future dividend growth will depend on earnings growth as well as 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 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MGEE for this fiscal year. The Zacks Consensus Estimate for 2023 is $3.37 per share, with earnings expected to increase 9.77% from the year ago period.
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. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, 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).