Investors Might Shun SCANA despite Its 5% Yield

Dividend yield

SCANA (SCG) stock correcting sharply in the last few months led it to the peak of the top-yielding utilities among the S&P 500 Utilities Index (XLU). Currently, it’s trading at a dividend yield of 5.0%, while the Utilities Select Sector SPDR ETF (XLU), which represents SPX Utilities, offers a yield of 3.5%.

SCANA’s five-year historical dividend yield is ~3.7%—way lower than its current yield. Such a steep rise in SCANA’s dividend yield is likely due to the stock’s vertical fall.

Investors Might Shun SCANA despite Its 5% Yield

Peers’ dividend yields

Southern Company (SO) holds the second spot among the highest-yielding utility stocks with a dividend yield of 4.7%. Competitive utilities FirstEnergy (FE) and Entergy (ETR) trade at a dividend yield of 4.6% and 4.5%, respectively. Read Are the Top-Yielding Utilities Really Worth the Risk? for a comparative analysis of the top-yielding SPX utilities.

SCANA’s dividend profile

SCANA is expected to pay an annualized per share dividend of $2.45 this year. Compared to its dividends in 2016, it implies a rise of more than 6% per share year-over-year. In the last five years, SCANA has managed to increase its per share dividends more than 4% compounded annually—in line with the industry average.

Considering the historical dividend yield and per share dividend growth, SCANA’s dividend profile looks satisfactory. However, its volatile stock movements, considering its grimmer growth prospects, might continue to hamper investors’ total returns going forward.

In the next part, we’ll look at SCANA’s total returns.