Portland General Electric's (NYSE:POR) Upcoming Dividend Will Be Larger Than Last Year's

Portland General Electric Company (NYSE:POR) will increase its dividend on the 15th of July to $0.525, which is 5.0% higher than last year's payment from the same period of $0.50. This takes the dividend yield to 4.6%, which shareholders will be pleased with.

Our free stock report includes 3 warning signs investors should be aware of before investing in Portland General Electric. Read for free now.

Portland General Electric's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Portland General Electric's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 21.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 62%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Portland General Electric

Portland General Electric Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $1.12 in 2015, and the most recent fiscal year payment was $2.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.0% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Portland General Electric May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, Portland General Electric has only grown its earnings per share at 3.6% per annum over the past five years. Portland General Electric is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

Our Thoughts On Portland General Electric's Dividend

Overall, we always like to see the dividend being raised, but we don't think Portland General Electric will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Portland General Electric (of which 1 is significant!) you should know about. 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.