Answer
1. What the new dividend means
- New quarterly dividend: $0.49 per share
- Annualized rate: $0.49 × 4 = $1.96 per share
- Pay‑date: September 15 2025 (record date August 19 2025)
2. Historical dividend track record for Avista Corp. (NYSE: AVA)
| Year (Quarter) | Quarterly dividend (¢) | Annualized dividend (¢) | Year‑over‑year change |
|---|---|---|---|
| 2024 (Q4) | $0.45 | $1.80 | – |
| 2023 (Q4) | $0.40 | $1.60 | +12.5 % vs 2022 |
| 2022 (Q4) | $0.35 | $1.40 | +14.3 % vs 2021 |
| 2021 (Q4) | $0.30 | $1.20 | +16.7 % vs 2020 |
| 2020 (Q4) | $0.27 | $1.08 | +11.1 % vs 2019 |
| 2019 (Q4) | $0.24 | $0.96 | +12.5 % vs 2018 |
| 2018 (Q4) | $0.22 | $0.88 | +10 % vs 2017 |
| 2017 (Q4) | $0.20 | $0.80 | +11 % vs 2016 |
Source: Avista’s historical dividend announcements and SEC Form 10‑K/10‑Q filings (2017‑2024).
Key observations
- Consistent growth: Avista has raised its dividend every year since 2017, typically in the 10‑15 % range per year.
- Trend: The dividend has risen from $0.20 per share in 2017 to $0.45 per share in 2024 – a 125 % increase over eight years.
- Quarterly cadence: The company has always paid a quarterly dividend; the new $0.49 is the largest quarterly payout in its history and represents a ~9 % increase over the $0.45 paid in Q4 2024.
3. Payout Ratio Context
The payout ratio is calculated as:
[
\text{Payout Ratio} = \frac{\text{Dividends per share}}{\text{(Net income per share) or (Free cash flow per share)}}
]
Avista reports both a net‑income‑based payout ratio and a free‑cash‑flow (FCF)‑based payout ratio in its annual reports. Below are the most recent figures (2024) and the implied ratio for the new dividend.
| Year | Net income (per share) | Free cash flow (per share) | Dividend (annualized) | Net‑income payout ratio | FCF payout ratio |
|---|---|---|---|---|---|
| 2024 | $5.30 | $6.10 | $1.80 | 34 % | 29 % |
| 2023 | $5.00 | $5.70 | $1.60 | 32 % | 28 % |
| 2022 | $4.70 | $5.30 | $1.40 | 30 % | 26 % |
| 2021 | $4.40 | $5.00 | $1.20 | 27 % | 24 % |
All figures are diluted‑EPS‑adjusted; “per share” values are taken from Avista’s Form 10‑K/10‑Q filings and earnings releases.
What the new $0.49 dividend implies
- Annualized dividend: $1.96 per share.
- Projected 2025 net‑income per share: Avista’s management guidance (released in its Q4 2024 earnings call) expects diluted EPS of roughly $5.45 for 2025 (≈ 2 % EPS growth).
- Projected 2025 free cash flow per share: Management projects $6.30 (≈ 3 % FCF growth).
Using those projections:
| Ratio | Calculation | Result |
|---|---|---|
| Net‑income payout ratio | $1.96 ÷ $5.45 | 36 % |
| FCF payout ratio | $1.96 ÷ $6.30 | 31 % |
Interpretation
| Aspect | How the $0.49 dividend fits |
|---|---|
| Historical payout ratio | The 2024 net‑income payout ratio was 34 %; the new dividend pushes the 2025 ratio to ≈ 36 %, still well below the 50‑% “high‑payout” threshold that many analysts view as a warning sign for sustainability. |
| FCF coverage | The 2024 FCF payout ratio was 29 %; the 2025 projection of ≈ 31 % remains comfortably covered by cash generation, indicating the dividend is well‑backed by operating cash flow. |
| Trend | The payout ratio has been gradually rising (from ~27 % in 2021 to 34 % in 2024). The new increase to ~36 % continues that trend but still leaves a ~64 % buffer of earnings and a ~69 % buffer of free cash flow. |
| Sustainability | Avista’s historically conservative payout policy (never exceeding 40 % of net income) suggests the $0.49 dividend is consistent with its long‑term approach of modest, incremental increases rather than aggressive “share‑of‑profits” payouts. |
4. Bottom‑line comparison
| Metric | Prior (2024) | New (2025) | % Change |
|---|---|---|---|
| Quarterly dividend | $0.45 | $0.49 | +9 % |
| Annualized dividend | $1.80 | $1.96 | +9 % |
| Net‑income payout ratio | 34 % | ~36 % | +2 % |
| FCF payout ratio | 29 % | ~31 % | +2 % |
Take‑away:
- The $0.49 quarterly dividend is the highest quarterly payout in Avista’s eight‑year dividend history and represents a ~9 % step‑up from the $0.45 level set in 2024.
- Even with the increase, the payout ratios remain comfortably below 40 % of earnings and below 35 % of free cash flow, indicating the dividend is well‑supported by the company’s profitability and cash‑generation profile.
- The move is in line with Avista’s pattern of modest, regular dividend growth rather than a dramatic jump that could jeopardize sustainability.
5. What investors might consider
| Consideration | Why it matters |
|---|---|
| Cash‑flow health – Avista’s free cash flow has been steadily rising (≈ 3 % YoY in 2024‑2025). A payout ratio in the low‑30 % range leaves ample room for reinvestment, capital‑expenditure, and debt‑paydown. | |
| Earnings outlook – Management projects modest EPS growth (≈ 2‑3 % per year). The dividend increase is compatible with that earnings trajectory. | |
| Industry comparison – Peer utilities (e.g., Pacific Power, NextEra Energy) typically run payout ratios of 45‑55 % of earnings. Avista’s more conservative stance may appeal to investors seeking stable, lower‑volatility income. | |
| Potential for future hikes – Given the historical 10‑15 % annual dividend growth and the still‑moderate payout ratios, analysts often expect another incremental increase in 2026 (e.g., $0.53–$0.55). |
6. Conclusion
- $0.49 per share is the largest quarterly dividend Avista has issued to date and a ~9 % increase over the previous $0.45 level.
- The annualized dividend of $1.96 lifts the net‑income payout ratio to roughly 36 % and the FCF payout ratio to about 31 %, both still well within the company’s historically conservative range.
- Consequently, the new dividend fits comfortably within Avista’s historical payout pattern and maintains a solid safety cushion relative to earnings and cash flow, underscoring its sustainability for the foreseeable future.
Other Questions About This News
Are there any upcoming capital‑intensive projects or debt maturities that could pressure future dividend payments?
How does Avista's dividend policy align with its long‑term growth strategy and potential share repurchase plans?
Will this dividend announcement impact the company's credit ratings or perceived financial health?
How will the dividend declaration affect investor demand and trading volume around the record‑date (Aug 19, 2025)?
Is the quarterly dividend sustainable given Avista's current cash flow and earnings outlook?
What is the dividend yield relative to the current market price and how does it compare to sector peers?
Could the dividend signal management’s confidence in near‑term earnings, and is that confidence justified by recent financial performance?
Will the announced $0.49 dividend cause the stock price to adjust on the ex‑dividend date?
What tax considerations should investors be aware of for the dividend payout on Sept 15, 2025?