Yahoo Finance PNM Resources (NYSE:PNM) Is Due To Pay A Dividend Of $0.3875
PNM Resources, Inc.'s (NYSE:PNM) investors are due to receive a payment of $0.3875 per share on 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' Payment Has Solid Earnings Coverage
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. 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.
Looking forward, earnings per share is forecast to rise by 197.3% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 56% which would be quite comfortable going to take the dividend forward.
PNM Resources Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.66 total annually to $1.55. This means that it has been growing its distributions at 8.9% per annum 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.
The Dividend's Growth Prospects Are Limited
The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. 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
Overall, we always like to see the dividend being raised, but we don't think PNM Resources will make a great income stock. 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 5 warning signs for PNM Resources (of which 2 don't sit too well with us!) 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.
