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What Will Drive The Dividend Growth Of ETR?



What is the dividend outlook?

Entergy Corporation’s (ETR) present dividend yield of 4.6% has been driven by dividend growth and price loss. Dividends grew 2% each in 2016 and 2017. The dividend is projected to grow 2% in 2018.

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What is the projected dividend payout?

The company recorded a dividend payout of 48% in 2016. It has a projected dividend payout of 51% in 2017 and 70% in 2018. The company has been unable to generate enough free cash flow to pay off its dividends. This is due to the high capital expenditure relative to its operating cash flow.

What drove the operating revenue growth?

Operating revenue fell 6% in 2016 before gaining 3% in 9M17. The decline in 2016 was due to lower revenue from the Electric, Natural Gas, and Competitive segments. Electric and natural gas revenues drove the growth in 9M17, offset by the rest. The Utility and Entergy Wholesale Commodities segments drove the decline in 2016, while the Utility segment drove the growth in 9M17 offset by the rest.

Dividend ETFs with exposure to ETR:

The WisdomTree Global Equity Income Fund (DEW) has a PE of 17.5x and a dividend yield of 3.2%. The Vanguard High Dividend Yield ETF (VYM) has a PE of 21.6x and a dividend yield of 2.8%.

We’ll read about the company’s EPS performance and the future operating revenue and EPS drivers in the next part of the series.


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