Yahoo Finance PNM Resources' (NYSE:PNM) Dividend Will Be $0.3875
PNM Resources, Inc. (NYSE:PNM) has announced that it will pay a dividend of $0.3875 per share on the 10th of May. Based on this payment, the dividend yield for the company will be 4.2%, which is fairly typical for the industry.
See our latest analysis for PNM Resources
PNM Resources' Dividend Is Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable. Before this announcement, PNM Resources was paying out 146% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.
Over the next year, EPS is forecast to expand by 197.3%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 56% which brings it into quite a comfortable range.
PNM Resources Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.66 in 2014, and the most recent fiscal year payment was $1.55. This works out to be a compound annual growth rate (CAGR) of approximately 8.9% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
PNM Resources May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Although it's important to note that PNM Resources' earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
PNM Resources' Dividend Doesn't Look Sustainable
In summary, while it's always good to see the dividend being raised, we don't think PNM Resources' payments are rock solid. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We don't think PNM Resources is a great stock to add to your portfolio if income is your focus.
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. Just as an example, we've come across 5 warning signs for PNM Resources you should be aware of, and 2 of them are concerning. 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.
