Albuquerque-based PNM Resources, Inc., which is one of the New Mexico companies on the New York Stock Exchange (NYSE: PNM), has announced that shareholders will continue to receive the increased dividend payment of $0.3875, which was first instituted on February 16th. This enhancement from last year’s dividend positions the yield at 3.7%, aligning with the industry’s average. The continued enhanced dividend is payable on May 10, 2024, to shareholders of record at the close of business on April 26, 2024.
In Simply Wall Street’s December analysis of PNM Resources, it was noted, “PNM Resources’ Earnings Easily Cover The Distributions.” Despite the appealing dividend yield, it’s crucial to evaluate the sustainability of such distributions. The previous dividend consumed a significant portion of the company’s free cash flows, compounded by a scarcity of free cash flows, which could indicate potential long-term risks.
According to the outlet, EPS growth is anticipated to be 74.3% over the coming year. If the dividend trajectory remains consistent with recent trends, Simply Wall Street estimates the payout ratio to be around 52%, which suggests a sustainable model.
Reviewing PNM Resources’ dividend history reveals a commendable consistency in payments. Since 2013, the annual dividend has grown from $0.66 to the current $1.55, marking an average annual increase of 8.9%. This steady growth, without significant reductions, enhances shareholder value.
However, investors hoping for continued dividend growth might need to temper their expectations. Despite the company’s earnings growing at 11% per year over the past five years, a high payout ratio could potentially limit future growth opportunities.
In conclusion, while the increase in PNM Resources’ dividend is welcome, investors should proceed with caution. The stability of past payments is a positive sign, yet the high payout ratio raises concerns about future growth and sustainability.
The latest PNM stock traded at $36.70 per share as of 8:00 p.m. on Sunday evening. Year-over-year, PNM Resources fell from a stock price of $48.66, possibly due to the international company Avangrid backing out of a merger with the company.
This article is not meant to provide investing advice but rather to report on PNM’s newly announced dividend.