April 12, 2025 a 02:46 pm
📊 Dividend Analysis - FirstEnergy Corp.
FirstEnergy Corp., with a market capitalization of approximately $23.43 billion and a dividend yield of 4.24%, is a key player in the Utilities sector. The company has maintained a consistent dividend history over the last 28 years, highlighting its commitment to returning value to shareholders. However, investors should note the high payout ratio and negative free cash flow, potentially signaling underlying financial challenges. Nevertheless, with a stable sub-sector position and strategic direction, its dividend prospects require keen monitoring.
🗣️ Overview
| Metric | Value |
|---|---|
| Sector | Utilities |
| Dividend Yield | 4.24% |
| Current Dividend per Share | 1.69 USD |
| Dividend History | 28 years |
| Last Cut or Suspension | None |
📈 Dividend History
FirstEnergy Corp.'s consistent dividend history is a strong indicator of its financial stability. Sustaining dividends over an extended period mirrors the firm’s commitment to its investors. This history is significant as it reassures investors of steady income and implies effective cash management practices despite any market volatility.
| Year | Dividend per Share |
|---|---|
| 2025 | 0.87 USD |
| 2024 | 1.68 USD |
| 2023 | 1.58 USD |
| 2022 | 1.56 USD |
| 2021 | 1.56 USD |
📉 Dividend Growth
A critical component of dividend assessment is growth over time. FirstEnergy Corp. displays slow yet positive dividend growth, with a 3-year growth rate of 2.60% and a 5-year rate of 2.08%. This modest growth, though slow, emphasizes the sustainable nature and potential longevity of its dividend policy.
| Time | Growth |
|---|---|
| 3 years | 2.60% |
| 5 years | 2.08% |
The average dividend growth is 2.08% over 5 years. This shows moderate but steady dividend growth, which can be attractive for investors looking for stability.
✅ Payout Ratio
Payout ratios offer insights into how sustainable a dividend is in relation to a company’s earnings. FirstEnergy Corp.’s EPS-based payout ratio stands at 99.27%, which is concerningly high. Additionally, the free cash flow-based payout ratio is -85.48%, reflecting not only a negative cash flow scenario but also an unsustainable dividend coverage from its cash flow operations.
| Key Figure | Ratio |
|---|---|
| EPS-based | 99.27% |
| Free Cash Flow-based | -85.48% |
The high EPS payout ratio suggests limited flexibility for future dividend increases or coverage during downturns.
💵 Cashflow & Capital Efficiency
The analysis of cash flow and capital efficiency metrics brings focus to a company's ability to sustain its operations and dividends. A negative free cash flow yield and high CAPEX ratio indicate operational challenges and investment-heavy activities. These financial dynamics suggest potential pressures on dividend sustainability.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | -4.98% | -9.37% | -0.30% |
| Earnings Yield | 4.28% | 5.25% | 1.70% |
| CAPEX to Operating Cash Flow | 139.40% | 241.96% | 102.72% |
| Stock-based Compensation to Revenue | 0% | 0% | 0.81% |
| Free Cash Flow / Operating Cash Flow Ratio | -39.40% | -141.96% | -2.72% |
Negative free cash flows alongside high CAPEX levels might impact dividend coverage adversely.
🏦 Balance Sheet & Leverage Analysis
Balance sheet metrics, including leverage ratios, are vital for assessing financial health. FirstEnergy's high debt-to-equity and debt-to-capital ratios reflect significant leverage, potentially elevating financial risks.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 1.93 | 2.39 | 2.13 |
| Debt-to-Assets | 46.16% | 51.08% | 46.96% |
| Debt-to-Capital | 65.86% | 70.47% | 68.05% |
| Net Debt to EBITDA | 5.83 | 6.64 | 6.23 |
| Current Ratio | 0.56 | 0.48 | 0.61 |
| Quick Ratio | 0.45 | 0.38 | 0.50 |
| Financial Leverage | 4.18 | 4.67 | 4.54 |
The high leverage and associated metrics highlight potential challenges in addressing debt obligations and maintaining liquidity.
📈 Fundamental Strength & Profitability
Profitability and return metrics reflect the inherent financial benefits and operational efficiency. The relatively modest return on equity and assets suggest room for improvement in maximizing shareholder value.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 7.85% | 10.56% | 3.99% |
| Return on Assets | 1.88% | 2.26% | 0.88% |
| Net Margin | 7.26% | 8.56% | 3.26% |
| EBIT Margin | 18.67% | 19.65% | 19.22% |
| EBITDA Margin | 30.46% | 28.97% | 27.70% |
| Gross Margin | 67.52% | 63.90% | 63.13% |
| R&D to Revenue | 0% | 0% | 0% |
While the profitability margins portray strength in core operations, the absence of R&D spending could limit long-term innovation potential.
📊 Price Development
⭐ Dividend Scoring System
| Category | Description | Score |
|---|---|---|
| Dividend Yield | A robust yield with market competitiveness. | 4/5 |
| Dividend Stability | Reliable dividend history over decades. | 5/5 |
| Dividend Growth | Steady yet slow growth in payouts. | 3/5 |
| Payout Ratio | High payout ratio indicating limited growth flexibility. | 2/5 |
| Financial Stability | High leverage may raise financial risks. | 2/5 |
| Dividend Continuity | No significant cuts or suspensions recently. | 5/5 |
| Cashflow Coverage | Negative free cash flow impacts coverage adversely. | 1/5 |
| Balance Sheet Quality | Leverage levels suggest potential vulnerabilities. | 2/5 |
Overall Score: 24/40
🏆 Rating
FirstEnergy Corp.'s current dividend profile exhibits a mix of strengths and challenges. While the robust yield and stability offer appeal, the high payout ratio and leverage suggest caution in expectations for future growth. Investors seeking income amid broader portfolio diversification might find value, albeit with some financial risk considerations.