Updated 3/11/2025
Nelnet, Inc. (NNI) might not be the first name that comes to mind when thinking about dividend stocks, but this financial services company has a lot going for it. Originally built as a student loan servicer, Nelnet has since expanded into areas like education technology, renewable energy, and communications. This diversification has helped the company grow while keeping its financial foundation strong.
For dividend investors, Nelnet offers a unique mix of steady payouts, a low dividend yield, and a solid financial backbone. The yield may not be eye-catching, but the company’s consistent approach to managing cash flow and reinvesting in its business makes it an appealing option for those looking beyond just high yields.
Key Dividend Metrics
📈 Dividend Yield: 0.97%
💵 Annual Dividend: $1.12 per share
⏳ 5-Year Average Dividend Yield: 1.14%
💰 Payout Ratio: 22.31%
📅 Next Dividend Payment: March 14, 2025
📉 Ex-Dividend Date: February 28, 2025
Dividend Overview
Nelnet may not offer the kind of high yields that income-focused investors crave, but what it does provide is reliability. With a payout ratio of just 22.31%, the company keeps most of its earnings for reinvestment, ensuring that dividends remain well-covered even if the market takes a downturn.
The yield sits at 0.97%, which is below the market average. However, a five-year average yield of 1.14% suggests some level of consistency. Investors looking for a dependable payout rather than a high yield will find comfort in Nelnet’s stable approach.
Like clockwork, Nelnet distributes its dividends quarterly, and the next payout is set for March 14, 2025. To qualify for it, investors needed to buy shares before the ex-dividend date of February 28, 2025.
Dividend Growth and Safety
One of Nelnet’s strengths is how it manages its dividend policy. The company isn’t known for aggressive increases, but its strategy of maintaining a well-covered, gradually growing payout is reassuring.
Dividend growth has been steady over the years, though not particularly fast-paced. But given its ultra-low payout ratio, there’s plenty of room for future increases. A ratio of 22.31% means the company could afford to raise its dividend significantly if it chose to, but for now, management seems more focused on using excess capital for reinvestment and expansion.
Cash flow is another area where Nelnet stands out. With operating cash flow of $662.89 million, the company has ample financial flexibility. Even though debt levels are high, strong cash generation keeps the dividend in a comfortable position.
Chart Analysis
Price Action and Trend
The stock has been on a steady climb over the past year, showing signs of a well-established uptrend. The 50-day simple moving average (SMA) had been supporting price action for most of the uptrend, but there was a brief breakdown below it before the stock rebounded. The 200-day SMA continues to rise, reinforcing the idea that the longer-term trend is still intact.
Recently, there was a sharp spike in price, followed by an equally sharp pullback. These kinds of movements can indicate either an exhaustion of buyers or profit-taking by investors who got in earlier. Despite this pullback, the price remains above the 200-day SMA, which suggests the broader trend is still bullish unless that level is broken decisively.
Volume and Market Participation
Volume levels have been relatively stable, with a few noticeable spikes during key price movements. There was a major surge in volume during the sharp rally seen in the last few months, indicating strong buying interest. However, the most recent decline has also been accompanied by increased selling volume, which signals that some traders are taking profits.
When price drops on high volume, it can mean that sellers are in control for the moment. On the other hand, if the stock can hold above key support levels on declining volume, that could suggest the selling pressure is temporary.
Relative Strength Index (RSI) and Momentum
The RSI has been moving lower after reaching elevated levels, suggesting that momentum is cooling off. It hasn’t quite reached oversold territory yet, but the downward move could mean the stock is in a short-term corrective phase.
A bounce in RSI from current levels would indicate that buyers are stepping back in, but if it continues to decline, it could confirm that the stock is losing steam. Monitoring how the RSI reacts to further price movement will be key in determining the next trend direction.
Support and Resistance Levels
The stock recently found resistance near the 120 level, where it faced a sharp rejection. That level now stands as an important ceiling that needs to be broken for another leg higher.
On the downside, the 50-day moving average could act as a first layer of support, but the more significant area to watch is the 200-day moving average, which has historically provided a strong foundation for price rebounds. If the stock closes below that level, it could indicate a shift in trend.
Moving Averages and Crossovers
Both the 50-day and 200-day SMAs are still sloping upward, which is a good sign for the longer-term trend. The stock is currently trading between these two moving averages, meaning it’s in a neutral zone where direction could go either way.
A sustained move above the 50-day SMA would be a bullish sign, while a drop below the 200-day SMA would be a potential warning of further downside. Watching how price reacts to these levels in the coming sessions will be important.
Recent Candlestick Patterns
The past few sessions have shown a mix of indecision and selling pressure. The recent high was followed by a steep drop, leaving behind a long upper wick on the candlestick, which typically signals that buyers tried to push higher but were overwhelmed by sellers.
More recently, the price has been consolidating just above the 200-day moving average. If a strong green candle forms with heavy volume, it could indicate that buyers are stepping back in. On the other hand, if selling pressure continues and new lows are made, it could mean that further downside is ahead.
Analyst Ratings
📈 Upgrades
On March 7, 2025, Nelnet received an upgrade to a “Strong Buy” rating. This positive shift was primarily driven by an upward trend in earnings estimates, indicating growing optimism about the company’s earnings prospects. Analysts pointed to stronger-than-expected revenue growth and improving margins, which have contributed to a more favorable outlook on the stock.
📉 Downgrades
On February 22, 2025, the stock was downgraded from a “Buy” to a “Hold” rating. The reasons cited for this downgrade included concerns about the company’s high debt levels and potential regulatory risks associated with its core business operations. Some analysts have pointed to macroeconomic factors that could impact the company’s lending segment, leading to a more cautious stance on the stock.
🎯 Consensus Price Target
As of March 11, 2025, the consensus among analysts is a “Hold” rating for Nelnet, with an average price target of $98. This target suggests a cautious outlook, reflecting both the company’s strengths and the challenges it faces in the current market environment.
Earning Report Summary
Nelnet, Inc. (NNI) recently released its latest earnings report, and overall, the numbers show a company that is navigating challenges while finding opportunities for growth. The fourth quarter and full-year results paint a picture of steady improvement, with some standout performances in certain business segments.
Fourth Quarter 2024 Highlights
The company posted a net income of $63.2 million for the fourth quarter, translating to $1.73 per share. That’s a significant turnaround from last year’s net loss during the same period. Revenue also came in stronger than expected, reaching $401.61 million, well above analysts’ estimates of $335 million.
Full-Year 2024 Performance
For the full year, Nelnet reported a net income of $184.05 million, nearly doubling the $89.83 million it earned in 2023. Earnings per share climbed to $5.02, up from $2.40 in the previous year. The company’s ability to manage costs and improve efficiencies played a big role in these stronger results.
Breaking Down the Business Segments
- Asset Generation and Management: This segment saw a decline in net interest income, dropping to $58.5 million from $70.1 million a year earlier. The dip was expected as the loan portfolio continues to run off, with the average balance of loans outstanding falling from $18.1 billion to $14.8 billion over the past year.
- Loan Servicing and Systems: Revenue from loan servicing totaled $140 million in the fourth quarter, slightly down from the previous year. The decrease came as the company wrapped up additional work related to student loan borrowers transitioning out of pandemic forbearance.
- Education Technology, Services, and Payment Processing: This segment was a bright spot, bringing in $98.3 million in revenue for the quarter, a jump from $81 million the previous year. The boost was driven by higher transaction volumes and new client acquisitions.
Operational Growth
Nelnet continues to expand its loan servicing reach, now managing $587.5 billion in various government-owned and private education loans for 17.6 million borrowers. That’s up from $529 billion and 16.4 million borrowers a year ago, showing steady growth in its servicing business.
Looking Ahead
Company leadership remains optimistic about the future, citing strong performance in education technology, financial services, and loan servicing. While they acknowledge that earnings may fluctuate in the short term due to the gradual wind-down of certain loan programs, the company believes it is well-positioned for long-term success.
Financial Health and Stability
Nelnet is in a solid financial position, but like any company, it has areas of strength and some concerns to watch.
Revenue is strong, reaching $1.35 billion over the last twelve months, with an impressive 36.3% year-over-year growth. That level of expansion suggests Nelnet is doing more than just holding steady—it’s finding ways to grow beyond its legacy student loan business.
Profitability metrics are respectable, with a 13.58% profit margin and an operating margin of 21.53%. While these numbers aren’t sky-high, they reflect a well-managed company that knows how to turn revenue into profits.
Debt is where some concerns arise. Nelnet carries $8.32 billion in total debt, leading to a debt-to-equity ratio of 252.23%. That’s quite high, especially for a company with a relatively modest dividend yield. However, the company’s current ratio of 6.73 indicates strong short-term liquidity, meaning it shouldn’t struggle with near-term financial obligations.
On the cash side, Nelnet holds $197.75 million, providing a buffer against economic uncertainty. While the company’s debt load is a factor to monitor, its ability to generate cash flow suggests it can manage this liability effectively.
Valuation and Stock Performance
For investors who care about valuation, Nelnet looks reasonably priced.
The stock’s trailing price-to-earnings (P/E) ratio sits at 23.08, while its forward P/E is a lower 15.75. That suggests the market expects earnings to grow, making the current price look more attractive based on future profitability.
The price-to-book (P/B) ratio of 1.26 indicates that Nelnet is trading just slightly above its book value of $92.30 per share. For a financial services company, this is a reasonable valuation, neither too expensive nor deeply undervalued.
Stock performance has been strong over the past year, with a 52-week high of $127.32 and a low of $87.02. Currently trading around $114.70, the stock is hovering near its 50-day moving average of $110.91 and its 200-day average of $109.35. That suggests the stock is in a stable uptrend without being excessively overbought.
With a beta of 0.89, Nelnet is less volatile than the broader market, making it a relatively steady choice for long-term investors.
Risks and Considerations
Like any investment, Nelnet comes with risks.
Debt is the biggest concern. A debt-to-equity ratio above 250% means the company is heavily leveraged. If interest rates stay high or the company’s revenue slows, debt servicing costs could become a problem.
Regulatory risks are also something to keep in mind. While Nelnet has diversified beyond student loans, any major changes in federal loan policies could still impact its business.
The dividend yield, while stable, is on the lower side. For investors who prioritize dividend income, there are other stocks with significantly higher yields. Nelnet is more of a total return play rather than a pure income stock.
Economic sensitivity is another factor. While Nelnet has been expanding into new business areas, it’s still tied to financial services. If loan demand slows or default rates rise, earnings could take a hit.
Final Thoughts
Nelnet isn’t a stock for those chasing high dividend yields, but it offers something equally valuable—stability. With a well-covered dividend, strong cash flow, and a conservative payout ratio, investors can feel confident that their income stream is secure.
For those who prioritize long-term growth alongside a modest dividend, Nelnet presents an interesting opportunity. The company’s diversified business model, consistent revenue growth, and disciplined financial management make it a strong contender for investors looking for a mix of reliability and potential upside.
However, the high debt load and relatively low yield mean it won’t be the right fit for every income investor. Those looking for a pure dividend play might find better options elsewhere, but for those who appreciate financial strength and sustainable growth, Nelnet is worth keeping on the radar.
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