Public Service Enterprise Group (NYSE:PEG) Has Announced A Dividend Of $0.57

Public Service Enterprise Group Incorporated (NYSE:PEG) has announced that it will pay a dividend of $0.57 per share on the 29th of December. This takes the annual payment to 3.5% of the current stock price, which is about average for the industry.

See our latest analysis for Public Service Enterprise Group

Public Service Enterprise Group's Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Public Service Enterprise Group was paying only paying out a fraction of earnings, but the payment was a massive 154% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Looking forward, earnings per share is forecast to fall by 26.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 57%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Public Service Enterprise Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $1.44 in 2013 to the most recent total annual payment of $2.28. This means that it has been growing its distributions at 4.7% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Public Service Enterprise Group has grown earnings per share at 5.3% per year over the past five years. Public Service Enterprise Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Public Service Enterprise Group's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Public Service Enterprise Group is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Public Service Enterprise Group you should be aware of, and 2 of them shouldn't be ignored. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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