Comparing the Dividend Yields of CMS Energy and DTE Energy



CMS Energy: Dividend yield

CMS Energy (CMS) has paid dividends of $0.93 per share so far in 2016. Currently, it’s trading at a dividend yield of 2.8%, compared to the average yield of 4% among US utilities as of September 22, 2016. 

CMS’s annual dividend growth has been more than 7% in the past year. It’s been 8% for the past five years.


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Peer comparison

CMS’s Michigan peer DTE Energy (DTE) currently yields more than 3.2%. Along with regulated utility operations, DTE also engages in non-utility operations, which generally garner higher returns compared to utility operations.

On the other hand, CMS Energy is planning to turn into a pure-play regulated utility in the next few years. Higher regulated operations tend to generate relatively stable earnings, ultimately boding well for stable dividends.

Duke Energy (DUK), the second-biggest utility by market capitalization, yields 4.2%. Southern Company (SO) yields nearly the same. Both these utilities have almost entirely regulated operations.

ETF exposure

The iShares Select Dividend ETF (DVY) tracks the investment results of an index consisting of high dividend–paying US companies. The fund has 100 stocks in its holdings, with five-year records of dividend payments, and it has the maximum weight of nearly 30% in US utilities (XLU). Notably, CMS Energy makes up nearly 1% of DVY.

In the next article, we’ll continue our discussion of dividends among major utilities. What can investors expect going forward?


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