Currently, Sempra Energy (SRE) stock offers a dividend yield of 3%, which is in line with the industry average. The company’s five-year historical average yield is close to the current levels.
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In the last five years, Sempra Energy increased its dividend more than 7% compounded annually. The company’s 2019 dividends increased for the ninth consecutive year. On average, utilities (XLU) managed to increase their dividends ~4% during the same period. Edison International’s (EIX) five-year dividend growth rate was more than 12%. Edison International is trading at a dividend yield of 3.8%, which is higher than its five-year average. Top regulated utility stocks Southern Company (SO) and Duke Energy (DUK) offer a dividend yield of 4.7% and 4.2%, respectively. Edison International has raised its dividend for 15 consecutive years.
Sempra Energy’s payout ratio for 2018 was 105%, which was notably higher than its historical average of 66%. Sempra Energy’s higher payout ratio indicates that it paid more in dividends than it earned last year. The payout ratio is the part of the profit a company gives to shareholders in the form of dividends.
Sempra Energy intends for a dividend increase of 8%–9% annually through 2020. The utility’s expected premium earnings growth for the next few years could keep fueling its above-average dividend growth.