OGE Energy (NYSE:OGE) Has Affirmed Its Dividend Of US$0.41

OGE Energy Corp.'s (NYSE:OGE) investors are due to receive a payment of US$0.41 per share on 29th of July. This means the annual payment is 4.0% of the current stock price, which is above the average for the industry.

View our latest analysis for OGE Energy

OGE Energy's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, OGE Energy's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Looking forward, earnings per share is forecast to fall by 54.3% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 80%, which is definitely on the higher side.

OGE Energy Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the first annual payment was US$0.75, compared to the most recent full-year payment of US$1.64. This implies that the company grew its distributions at a yearly rate of about 8.1% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see OGE Energy has been growing its earnings per share at 22% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On OGE Energy's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While OGE Energy is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 5 warning signs for OGE Energy you should be aware of, and 2 of them make us uncomfortable. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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