Updated 3/11/2025
NiSource Inc. (NYSE: NI) is a steady player in the utility sector, providing natural gas and electricity to customers across six states in the Midwest and Northeast. As a fully regulated utility, it operates in a predictable environment where revenue is largely determined by government-approved rate structures. This makes it an appealing choice for dividend investors who prioritize stability over high growth.
While NiSource isn’t a high-yield stock, it has a strong track record of paying and increasing dividends over time. The company is investing in infrastructure improvements and clean energy transitions, aiming for long-term sustainability. For investors looking for reliable income, it’s worth examining whether NiSource’s dividend can continue growing while remaining secure.
Key Dividend Metrics
📌 Dividend Yield: 2.89% – A solid payout, though slightly below its five-year average.
📌 Annual Dividend per Share: $1.12 – A steady income stream backed by regulated cash flow.
📌 Payout Ratio: 65.43% – In a healthy range for a utility, meaning dividends are well-covered.
📌 5-Year Dividend Growth Rate: Around 6% – A consistent increase that keeps up with inflation.
📌 Ex-Dividend Date: February 3, 2025 – The cutoff date to qualify for the next payout.
📌 Dividend Payment Date: February 20, 2025 – When shareholders can expect their next dividend.
Dividend Overview
NiSource has built a reputation as a reliable dividend payer. With a 2.89% yield, it offers moderate income, though it’s slightly below its historical average of 3.43%. Compared to other utility stocks, the yield is on the lower end, as some peers offer yields north of 3.5%. However, NiSource makes up for this with a strong commitment to dividend growth.
The regulated nature of the business ensures stable earnings, making it easier for the company to maintain consistent payouts. Even in economic downturns, utilities tend to hold up well since electricity and gas are essential services. This defensive quality is why many income investors look to utility stocks for stability.
Dividend Growth and Safety
Dividend growth is a key factor for long-term investors, and NiSource has delivered on that front. Over the past five years, it has increased its dividend at an average rate of about 6% per year. That’s a healthy growth rate for a utility, outpacing inflation and offering investors a rising income stream over time.
From a sustainability perspective, the 65.43% payout ratio indicates that NiSource is in a comfortable position. Utilities typically operate with payout ratios between 60% and 75%, so this level suggests there’s still room for continued increases without putting excessive strain on cash flow.
One thing to watch, though, is the company’s free cash flow. While operating cash flow is strong at $1.78 billion, free cash flow is currently negative (-$648 million). This suggests NiSource is heavily reinvesting in infrastructure, which is common for utilities but does mean some of its dividend funding comes from debt.
Chart Analysis
Overall Trend
NiSource’s stock has been in a strong uptrend over the past year, steadily climbing with minimal drawdowns. The price has been consistently trading above both the 50-day and 200-day moving averages, reinforcing the long-term bullish momentum. Even with some recent consolidation, the overall trajectory remains positive.
Moving Averages
The 50-day moving average is clearly above the 200-day moving average, a classic sign of a bullish trend. The price has tested the 50-day moving average multiple times over the past few months and has generally bounced off it, suggesting that short-term buyers continue to step in on pullbacks.
The 200-day moving average is sloping upward, which signals that the long-term trend remains strong. As long as the price stays above this level, the broader bullish trend remains intact.
Volume Activity
Trading volume has been relatively steady, with occasional spikes indicating heightened investor activity. Notably, there have been larger green volume bars during strong price rallies, showing that buyers have been aggressive in pushing the stock higher. However, recent selling volume has picked up slightly, which could indicate some short-term profit-taking.
Relative Strength Index (RSI)
The RSI is hovering in the middle range after previously reaching overbought levels. This suggests that the stock has cooled off from its recent highs but is not yet in oversold territory. If RSI continues to decline toward the 30 level, it could indicate a potential buying opportunity.
Recent Price Action
The stock reached a recent high near 40 but has pulled back slightly, closing at 38.82. Over the last five sessions, there has been some volatility, with price swings between 38.45 and 39.18. The latest candles show some upper wicks, which suggests that there has been selling pressure near the highs. If this continues, the stock may enter a consolidation phase before making its next move.
Support and Resistance
The most immediate support level appears to be near 37.50, where the stock previously found buying interest. If this level holds, the stock could continue its upward trend. Resistance is near the 40 mark, which acted as a barrier during the most recent price movement. A break above 40 with strong volume could lead to another leg higher.
Analyst Ratings
🟢 NiSource Inc. (NI) has recently been the subject of various analyst evaluations, reflecting both optimism and caution. The consensus among analysts positions the stock favorably, with an average price target of approximately $42.09.
Upgrades
🔼 Several analysts have expressed increased confidence in NiSource’s prospects:
- 🏦 Wells Fargo & Company raised its price target to $43 from $39, maintaining an “Overweight” rating.
- 📈 Mizuho boosted its price target to $40 from $38, reiterating an “Outperform” rating.
- 📊 Jefferies Financial Group initiated coverage with a “Buy” rating and a price target of $39.
These upgrades are largely attributed to NiSource’s strategic initiatives in infrastructure development and a positive outlook on regulatory environments.
Downgrades
🔽 Conversely, some analysts have adopted a more cautious stance:
- ⚖️ UBS Group upgraded NiSource from “Neutral” to “Buy,” setting a price target of $31, reflecting increased optimism about the company’s valuation and growth prospects.
- 📉 Guggenheim lowered its price target to $27 from $30, maintaining a “Neutral” rating, citing concerns over potential regulatory challenges and market conditions.
Consensus Price Target
📌 The average price target among analysts stands at $42.09, with forecasts ranging from a low of $37.00 to a high of $43.00. This spectrum indicates a balanced view of NiSource’s potential, acknowledging both its growth initiatives and the challenges it may face in the current market landscape.
Earnings Report Summary
NiSource Inc. recently shared its latest earnings results, and there’s plenty for investors to digest. The company posted a net income of $739.7 million for the year, which translates to earnings of $1.62 per share. That’s a solid jump from last year’s $661.7 million, or $1.48 per share. It’s clear that NiSource is continuing to grow at a steady pace, and its latest numbers reflect that momentum.
Looking at the adjusted figures, which smooth out some of the one-time items, the company reported an adjusted net income of $798.6 million, or $1.75 per share. That’s an improvement from $716.3 million, or $1.60 per share, in the previous year. What stands out here is that NiSource not only exceeded its earnings guidance but has also maintained an impressive 8.5% compound annual growth rate over the past three years.
With that in mind, the company is feeling optimistic about the future. For 2025, NiSource has raised its earnings forecast to a range of $1.85 to $1.89 per share. Alongside that, it has slightly increased its planned capital spending to $19.4 billion. These investments are expected to fuel 8% to 10% growth in its rate base, which should, in turn, support annual earnings growth of 6% to 8% over the next several years.
NiSource’s CEO, Lloyd Yates, credited the company’s success to the dedication of its employees and suppliers. He emphasized the company’s focus on delivering long-term value not just for shareholders but also for customers and regulators.
The big takeaway here is that NiSource is steadily expanding while keeping its financials strong. With ambitious plans for future investments and a solid track record of growth, the company seems well-positioned to maintain its upward trajectory in the years ahead.
Financial Health and Stability
Like most utility companies, NiSource carries a significant amount of debt due to the capital-intensive nature of its business. The total debt stands at $13.99 billion, with a debt-to-equity ratio of 131.11%. That’s on the higher side, but it’s not unusual for a regulated utility that has predictable revenue streams.
The company maintains a profit margin of 13.94% and an operating margin of 26.36%, both solid numbers for the industry. Return on equity (ROE) is at 8.12%, which isn’t particularly high but is in line with what’s expected for a utility where regulated returns are capped.
One concern is the current ratio of 0.51, which indicates that short-term liabilities exceed short-term assets. However, this isn’t necessarily a red flag, as utilities have steady cash inflows that help them manage short-term obligations.
Valuation and Stock Performance
Is NiSource Fairly Priced?
At a forward price-to-earnings (P/E) ratio of 20.79, NiSource is trading at a slight premium compared to many of its utility peers, which typically have P/E ratios in the 16-18 range. This suggests that the market is pricing in future earnings growth, likely due to the company’s clean energy initiatives and infrastructure upgrades.
The price-to-earnings growth (PEG) ratio of 2.17 indicates that investors are paying a premium for growth. While utilities aren’t known for high growth, NiSource’s investments in modernization and transition to cleaner energy sources may justify the valuation.
Stock Price Trends
NiSource’s stock has seen strong gains over the past year, rising from a 52-week low of $26.04 to its current level near $38.82. That’s a 45.67% jump, significantly outperforming the broader market.
The stock is currently trading above both its 50-day moving average ($38.11) and its 200-day moving average ($34.19), signaling that the upward trend remains intact.
Risks and Considerations
- Interest Rate Sensitivity – Like most utility stocks, NiSource is sensitive to changes in interest rates. Higher rates increase borrowing costs, which can put pressure on earnings and dividend growth. However, if the Federal Reserve eases rates in the coming months, this risk could subside.
- Regulatory Environment – Since the company operates in a regulated industry, changes in government policies, environmental mandates, or rate approval processes could impact its profitability.
- Debt Load – With a high debt-to-equity ratio, NiSource is reliant on borrowing to finance its operations and dividend payments. Rising interest rates could make debt refinancing more expensive in the future.
- Lower Dividend Yield – While the dividend is growing, the current yield is below its historical average. Investors purely focused on yield might find better opportunities in higher-yielding utilities.
Final Thoughts
For investors looking for a steady and growing dividend, NiSource presents a solid option. It may not have the highest yield in the sector, but its commitment to dividend growth, stable earnings, and defensive business model make it a dependable income stock.
With a payout ratio in a comfortable range and a history of increasing dividends, the company appears well-positioned to continue rewarding shareholders. However, its relatively high valuation and debt levels are factors to keep in mind, particularly for those seeking a higher-yielding alternative.
Overall, NiSource remains a stable choice for dividend-focused investors who value consistency and long-term growth over short-term yield.
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