Boston-based Eversource Energy (ES) has a $20-billion market capitalization and primarily serves Massachusetts, Connecticut, and New Hampshire. In the past five years, Eversource Energy has raised its per-share dividend by 10.1%, compounded annually.
ES is now trading at a dividend yield of 3.1%, compared with the industry average yield of 3.5%.
Eversource Energy’s current dividend yield is close to its five-year historical dividend yield. Its payout ratio last year came in at 60%. Historically, Eversource has given away nearly 61% of its earnings in the form of dividends.
But Eversource Energy, like peers, has been facing revenue headwinds due to sluggish power demand growth in over the past few years. It has thus been expanding its operations in the midstream and in the gas distribution segment after weak growth opportunities in the electric domain.
ES has already rallied more than 15% YTD (year-to-date), outperforming broader utilities. Over the past year, its returns including dividends have come in at 19%, and it has returned 12%, compounded annually, over the past five years. Eversource Energy’s average earnings growth over the past five years was slightly over 5%. It projects that its earnings will expand by 5%–7% over the next five years, which would be in line with the industry average (VPU).
By comparison, the Utilities Select Sector SPDR ETF (XLU) has managed to return 13% over the past year, while it has returned 12%, compounded annually, over the past five years.