Updated 3/11/2025
OGE Energy Corp. (NYSE: OGE) is a utility company that provides electricity to over 880,000 customers across Oklahoma and western Arkansas. Its core business revolves around its regulated subsidiary, Oklahoma Gas & Electric (OG&E), which operates in a stable and predictable environment. For dividend investors, OGE is the kind of stock that offers reliable income with relatively low volatility, making it a staple for those who prefer steady cash flow over rapid capital appreciation.
The utility sector is known for consistency, and OGE Energy fits the mold well. It’s not the most exciting stock, but for investors looking for a dependable dividend payer, it’s worth a closer look.
Key Dividend Metrics
📌 Dividend Yield – 3.82% (a solid yield in the utility space)
📌 Annual Dividend – $1.69 per share
📌 Payout Ratio – 76.66% (high but typical for utilities)
📌 5-Year Avg. Dividend Yield – 4.56%
📌 Dividend Growth – Slow but steady increases over the years
📌 Next Ex-Dividend Date – April 7, 2025
📌 Next Dividend Payment – April 25, 2025
Dividend Overview
OGE Energy’s current dividend yield of 3.82% makes it an attractive option for income investors. While it’s slightly below the company’s five-year average of 4.56%, it remains competitive compared to other utility stocks. The utility sector is known for paying out a large portion of earnings to shareholders, and OGE is no exception. Its payout ratio of 76.66% is on the higher side but still within the normal range for utilities, which tend to have stable and predictable cash flows.
The company has a long track record of paying dividends consistently. While the growth rate isn’t particularly aggressive, investors who prioritize reliability over high dividend hikes will find OGE appealing. The next dividend payout is scheduled for April 25, 2025, with the ex-dividend date on April 7, 2025.
Dividend Growth and Safety
When evaluating a dividend stock, two things matter: how often the company increases its dividend and whether those payments are sustainable. OGE Energy has maintained a slow but steady dividend growth rate.
The high payout ratio suggests that most of the company’s earnings are already going toward dividends, leaving less room for aggressive increases. However, since OGE operates as a regulated utility, its revenue is generally stable, making its dividend relatively secure.
A potential concern is its cash flow situation. The company reported negative levered free cash flow of -$323.45 million, which indicates that it is spending more than it’s bringing in after covering obligations. While this doesn’t necessarily mean a dividend cut is imminent, it does highlight the importance of monitoring the company’s financial flexibility moving forward.
Chart Analysis
The price action of OGE Energy Corp. over the past year shows a strong upward trend, with the stock making steady gains and maintaining support along its moving averages. The recent pullback from highs near $45 suggests some resistance at that level, but the overall trend remains constructive.
Trend and Moving Averages
The 50-day simple moving average (SMA) has consistently acted as dynamic support throughout the uptrend, with the stock bouncing off it multiple times. The 200-day SMA remains in a steady upward trajectory, reinforcing the long-term bullish momentum. As long as the price stays above both these moving averages, the broader trend remains positive.
Volume and Buying Interest
Trading volume has remained relatively steady, with occasional spikes during price rallies. A significant volume increase in early February coincided with a breakout to new highs, indicating strong buying pressure at that time. However, recent sessions have shown a slight decline in volume, suggesting that some investors may be taking profits or waiting for further confirmation before committing to new positions.
Relative Strength Index (RSI)
The RSI is hovering in the mid-to-upper range, indicating that the stock had previously been in overbought territory but has now pulled back slightly. This cooldown could allow for further upside if buyers step in again. If the RSI starts dipping toward the 50 level, it could suggest a more significant retracement before another leg higher.
Recent Price Action
Over the past five trading sessions, the stock has seen some consolidation after hitting a recent high. The latest candlesticks show wicks on both ends, indicating some indecision in the market. While there is still buying pressure on dips, sellers are also stepping in near the highs, making this an important zone to watch for a potential breakout or breakdown.
Support and Resistance Levels
Key support sits near the 50-day moving average, which has provided a floor for the stock throughout the uptrend. Below that, the $42 level appears to be another area where buyers have stepped in previously. On the upside, resistance remains near the $45 mark, which has proven to be a barrier in recent sessions. A decisive move above this level could open the door for further gains.
Analyst Ratings
📈 Recent Upgrades
🟢 In January 2025, Evercore ISI analyst Durgesh Chopra upgraded OGE Energy Corp. from In Line to Outperform, raising the price target from $40 to $47. This upgrade reflects confidence in the company’s projected 7% earnings per share growth through 2027 and its solid financial position. The analyst pointed to OGE’s ability to maintain stable cash flows and navigate rising energy demand as key factors supporting the bullish outlook.
📉 Recent Downgrades
🔴 In May 2024, Argus Research downgraded OGE Energy Corp. from Buy to Hold, citing concerns about the company’s high debt load and regulatory risks. Analysts pointed to increasing borrowing costs and the potential for rate caps that could limit revenue growth. The downgrade also reflected a broader sector concern that utilities may face pressure in a higher interest rate environment, which could weigh on stock performance.
🎯 Consensus Price Target
As of March 2025, the consensus among analysts is a Moderate Buy rating for OGE Energy Corp., with an average price target of $45.67. This target suggests limited near-term upside but reflects an overall balanced outlook, with analysts acknowledging both the company’s strengths and the macroeconomic risks it faces.
Earning Report Summary
OGE Energy Corp. wrapped up 2024 with a strong quarter, reporting net income of $101.9 million, or $0.50 per share. That’s a significant jump from the same time last year when they brought in $48.3 million, or $0.24 per share. For the full year, earnings came in at $2.19 per share, topping the company’s earlier expectations, which ranged between $2.06 and $2.18 per share.
Solid Growth from the Utility Business
Most of OGE’s earnings came from its regulated electric utility, OG&E, which contributed $2.33 per share for the year. The company saw steady customer growth, adding more than 10,000 new accounts. Demand remained strong, especially in the commercial sector, where energy usage surged by over 21%. Industries like defense, manufacturing, and multi-unit housing were major drivers behind that increase.
Financial Strength
OGE’s balance sheet remains in good shape, with a projected funds from operations (FFO) to debt ratio of about 17%. Importantly, the company isn’t planning to issue additional equity in the near future, which is a positive sign for existing shareholders. It means they don’t expect to dilute shares while continuing to invest in growth.
Investing in the Future
Beyond just strong earnings, OGE is actively modernizing its operations. The company is investing in grid improvements and leveraging automation and AI to enhance efficiency and customer service. These initiatives should help the company stay ahead as the energy sector evolves.
What’s Ahead in 2025
Looking to the year ahead, OGE is projecting another solid performance. The company expects weather-normalized electricity demand to grow by 8.5% and has set an earnings guidance midpoint that’s 7% higher than last year. Over the long run, they are aiming for annual earnings growth in the range of 5% to 7%, which, if achieved, would provide steady returns for investors.
Overall, OGE Energy closed out 2024 on a high note, delivering strong financial results while laying the groundwork for future growth. With a solid customer base, improving efficiency, and a disciplined financial strategy, the company appears well-positioned heading into 2025.
Financial Health and Stability
As a utility, OGE Energy benefits from a regulated revenue stream, which provides stability even during economic downturns. However, there are some financial metrics worth keeping an eye on.
The company’s total revenue over the last twelve months was $2.99 billion, a strong showing with a year-over-year revenue growth of 34.2%. Operating margins are also healthy at 23.01%, and the profit margin sits at 14.79%. These numbers suggest that OGE is running an efficient operation.
One area of concern is the company’s debt load. With $5.56 billion in total debt and a debt-to-equity ratio of 119.7%, OGE carries a significant amount of leverage. This is common in the utility sector since companies often take on debt to fund infrastructure projects, but it’s something investors should keep in mind, especially in a rising interest rate environment.
Another potential issue is the company’s liquidity. It has only $600,000 in cash on hand, and the current ratio is 0.73, which suggests that short-term liabilities exceed readily available assets. While utilities typically rely on stable cash flows rather than large cash reserves, this does indicate limited financial flexibility.
Valuation and Stock Performance
OGE Energy’s stock is currently trading at $44.35, with a trailing price-to-earnings ratio of 20.12 and a forward P/E of 19.42. This suggests the stock is priced fairly in comparison to its earnings, though it isn’t particularly cheap.
Looking at other valuation metrics:
- The price-to-book ratio stands at 1.91, indicating that the stock is trading above its book value, but not excessively so.
- The enterprise value-to-EBITDA ratio is 10.94, suggesting that the stock is fairly valued relative to its earnings power.
- The PEG ratio (price/earnings to growth) is 4.18, which is on the higher side and indicates that the stock may not offer strong growth potential relative to its current price.
Over the past year, OGE Energy’s stock has ranged between $32.37 and $46.54. Its beta of 0.69 shows that it has lower volatility than the overall market, making it a relatively stable investment for income-focused investors.
Risks and Considerations
While OGE Energy is a solid dividend payer, there are some potential risks that investors should be aware of.
Rising Interest Rates
Utility stocks often carry high levels of debt, and OGE is no exception. Rising interest rates could lead to higher borrowing costs, which might impact profitability and, in turn, dividend sustainability.
Regulatory Challenges
As a regulated utility, OGE’s ability to raise rates and grow revenue is dependent on approvals from state regulators. If regulators deny or limit rate increases, it could put pressure on earnings and dividend payments.
High Payout Ratio
With a payout ratio of over 76%, OGE is returning most of its earnings to shareholders. While this is common for utilities, it does mean that there’s limited room for future dividend growth unless earnings increase.
Debt Load and Cash Flow Issues
The company’s high debt-to-equity ratio and negative free cash flow indicate that it may need to take on additional debt to fund operations and dividends. This is worth monitoring, especially in an environment where borrowing costs are rising.
Final Thoughts
OGE Energy is a steady and reliable dividend stock that fits well in a conservative income portfolio. It doesn’t offer explosive growth, but it does provide a predictable income stream with a relatively high yield.
The payout ratio is on the higher side, and the company carries a fair amount of debt, which could limit future dividend growth. However, as a regulated utility, its earnings are stable, making it less risky than many other sectors.
For investors looking for a dependable dividend stock with lower volatility, OGE Energy is a reasonable choice. It’s not without its challenges, particularly in terms of debt and cash flow, but for those who prioritize steady income over high growth, it remains a solid option in the utility space.
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