High Dividend Stocks: Pattern Energy Group, Inc, (NASDAQ:PEGI)
By: Ned Piplovic,
Despite being only five years old, Pattern Energy Group, Inc, (NASDAQ:PEGI) has delivered strong dividend income growth to its shareholders and has become one of the high dividend stocks.
In this context, high dividend yield stocks are defined as companies which have high current dividend yields. However, a high dividend yield on its own is not sufficient to place an equity among high dividend stocks. While some equities might have a very high dividend yield, high yield rates and yield increases can also easily result from declining share prices.
Therefore, to claim a place among high dividend stocks in this analysis, an equity must also meet several additional criteria. In addition to having a current dividend yield of more than 5%, equities must have positive total returns over both the past 12 months and the past three years, as well as a streak of annual dividend hikes for at least the past three years.
With five consecutive annual dividend hikes, a 7%-plus yield and a double-digit percentage total return over the past 12-month, the Pattern Energy Group checks every box as a high dividend stock and continues to deliver steady financial results.
High Dividend Stocks: Pattern Energy Group Financial Results
After delivering results in the upper half of its full-year 2018 guidance range, the Pattern Energy Group reported positive financial results for first quarter of the current fiscal year on May 10, 2019. Total revenue was 21% higher year over-year to $135 million. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) declined by 6% to $98 million. However, PEGI’s $53 million cash available for distribution (CAFD) was 23% higher than it was in the same period last year and is currently on pace to meet the guidance for full-year 2019.
“We continue to demonstrate a strong ability to manage the business for the wind variability experience. We are on track for our 2019 full year guidance target with our effective capital management and growth strategy, despite wind resource levels that were below the long-term average in the Eastern United States,” said Mike Garland, CEO of Pattern Energy.
Pattern Energy Group, Inc, (NASDAQ:PEGI)
Headquartered in San Francisco, California and founded in 2012, Pattern Energy Group, Inc. operates as an integrated renewable energy company. The company operates in two business segments — Operating Business and Development Business. The Operating Business segment holds interest in 24 renewable energy projects with an operating capacity that totals approximately four gigawatts located in the United States, Canada and Japan. The Development Business segment develops and sells renewable energy projects focusing on wind, solar, storage and transmission primarily in the United States, Canada, Japan and Mexico. Pattern Energy Group Inc. sells electricity and renewable energy credits primarily to local utilities and local liquid independent system organizations markets.
High Dividend Stocks: Pattern Energy Group Dividends
The Pattern Energy Group has boosted its annual dividend amount every year since introducing dividend income distributions in late 2013. Over the past five consecutive years since the onset of dividend income payouts, the Pattern Energy Group has enhanced its total annual dividend payout amount by nearly one third. This pace of dividend payout advancement corresponds to an average growth rate of nearly 6% per year.
The company’s current quarterly distribution amount of $0.422 is equivalent to a $1.688 annualized distribution for 2019 and a 7.4% forward dividend yield. This current yield is nearly 7% higher than the company’s own 6.88% average yield over the past five years. In addition to exceeding its own yield average, Pattern Energy’s current yield has outperformed the yields of all the company’s peers in the Electric Utilities industry segment.
As the segment’s top yield, Pattern Energy’s current yield is triple the 2.45% average yield of the entire segment, as well as 113% higher than the 3.44% yield average of the segment’s only dividend-paying companies. Furthermore, Pattern Energy’s current yield is also nearly 260% higher than the 2.05% simple average yield of the overall Utilities sector.
High Dividend Stocks: Pattern Energy Group Share Price
The share price experienced significant volatility following the company’s formation in 2013. However, since dropping to just 6% above its early-2016 all-time low in February 2018, the share price has been following a relatively steady uptrend with significantly less volatility.
A minor pullback at the onset of the trailing 12-month period pushed the share price down 11% to its 52-week low of $17.09 on July 13, 2018. Despite experiencing three minor pullbacks since the July low, the share price advanced 35.5% before reaching its 52-week high of $23.15 on May 3, 2019. Another pullback of nearly 10% followed a peak in early May. However, the share price recovered quickly to close on June 18, 2019 at $22.95 — just 0.9% below the 52-week high from early May.
However, the June 18 closing price was nearly 19.6% higher than it was one year earlier and more than 34% above the 52-week low from mid-July 2018. At the same time, because of high volatility in 2016 and 2017, the current share price is just 10% higher over the three-year period and 30% lower than it was five years ago.
Even strong dividend income distributions were unable to fully overcome the 30% share price deficit and the company delivered a marginal total loss of 0.2% over the past five years. However, the increasingly positive share price contributions over the last year has combined with dividend payouts to produce a total return of nearly 29% over the past 12 months. Additionally, the total return on shareholders’ investments has been nearly 34% over the past three years.
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