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Is CMS Energy (CMS) a Good Pick for Income Investors?
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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
CMS Energy in Focus
Headquartered in Jackson, CMS Energy (CMS - Free Report) is a Utilities stock that has seen a price change of 4.36% so far this year. The energy company is currently shelling out a dividend of $0.36 per share, with a dividend yield of 2.9%. This compares to the Utility - Electric Power industry's yield of 3.24% and the S&P 500's yield of 1.79%.
Looking at dividend growth, the company's current annualized dividend of $1.43 is up 7.5% from last year. In the past five-year period, CMS Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.23%. 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. CMS Energy's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CMS expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $2.34 per share, representing a year-over-year earnings growth rate of 7.83%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CMS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Is CMS Energy (CMS) a Good Pick for Income Investors?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
CMS Energy in Focus
Headquartered in Jackson, CMS Energy (CMS - Free Report) is a Utilities stock that has seen a price change of 4.36% so far this year. The energy company is currently shelling out a dividend of $0.36 per share, with a dividend yield of 2.9%. This compares to the Utility - Electric Power industry's yield of 3.24% and the S&P 500's yield of 1.79%.
Looking at dividend growth, the company's current annualized dividend of $1.43 is up 7.5% from last year. In the past five-year period, CMS Energy has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.23%. 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. CMS Energy's current payout ratio is 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CMS expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $2.34 per share, representing a year-over-year earnings growth rate of 7.83%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CMS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).