AVA

Is the quarterly dividend sustainable given Avista's current cash flow and earnings outlook?

Created August 06, 2025 at 08:50 PM

Short answer:

Based solely on the press‑release you quoted, we can confirm that Aviva Corp. (NYSE: AVA) has announced a $0.49 per‑share quarterly dividend payable on September 15, 2025 to shareholders of record on August 19, 2025. However, the release does not contain any information about Avista’s cash‑flow generation, earnings performance, payout ratio, or balance‑sheet strength. Consequently, we cannot definitively judge the sustainability of the dividend from the news item alone.

How to Assess Dividend Sustainability

When evaluating whether a quarterly dividend is likely to be maintained (or even grown) over time, analysts typically examine the following pillars:

Pillar	What to look at	Why it matters
1. Cash‑flow coverage	• Operating cash flow (OCF) per share (or OCF/ dividend) • Free cash flow (FCF) after capex and working‑capital needs	A dividend must be paid out of cash, not accounting earnings. If OCF comfortably exceeds the cash needed for the dividend, the payout is more secure.
2. Payout ratio	• Cash‑flow payout ratio = Dividend per share ÷ OCF per share • Earnings payout ratio = Dividend per share ÷ (Net income per share)	Ratios well below 100 % (e.g., 30‑50 % for cash‑flow, 40‑60 % for earnings) indicate room for the company to absorb a dip in earnings or to reinvest in growth. Ratios approaching or exceeding 100 % signal risk.
3. Earnings trend & outlook	• Recent quarterly/annual net‑income growth or decline • Management’s earnings guidance for the next 12‑24 months • Sensitivity to commodity price swings, regulatory changes, or macro‑economic factors (Avista is a regulated utility).	A stable or rising earnings base supports dividend continuity. A deteriorating earnings outlook (e.g., falling regulated returns) can pressure the dividend.
4. Leverage & debt service	• Debt‑to‑EBITDA, Debt‑to‑Equity, and interest‑coverage ratios • Upcoming maturities of large debt tranches	High leverage can force a company to prioritize debt‑service over dividend payouts, especially if cash‑flow is volatile.
5. Capital‑expenditure (Capex) needs	• Planned pipeline or grid‑investment programs, especially for utilities that must modernize infrastructure • Capex‑to‑OCF ratio	If capex consumes a large share of cash‑flow, the company may have to curtail dividends to fund essential projects.
6. Regulatory environment	• Rate‑case outcomes, allowed return on equity, and any dividend‑restriction clauses in the utility’s franchise agreement	Utilities like Avista often have dividend‑policy provisions tied to regulator‑approved earnings. A negative rate‑case can directly affect dividend sustainability.
7. Historical dividend behavior	• Track record of dividend cuts or suspensions • Frequency of “special” vs. “regular” dividends	A long, uninterrupted dividend history (e.g., >10 years) is a positive signal, whereas a recent special dividend may be less reliable.

What the Public Information Currently Shows

Item	Information from the release
Dividend amount	$0.49 per share (quarterly)
Payment date	September 15, 2025
Record‑date	August 19, 2025
Company	Avista Corp. (NYSE: AVA) – a regulated utility in the Pacific Northwest
Sector context	Utilities typically have relatively stable cash‑flows because of recurring, regulated revenue streams, but they also face capital‑intensive infrastructure upgrades and rate‑case cycles.

Missing data needed for a sustainability assessment:

Operating cash flow (OCF) and free cash flow (FCF) for the most recent quarter and year.
Net income (earnings) per share and any forward‑looking earnings guidance.
Debt profile (total debt, maturity schedule, interest‑coverage ratio).
Capex plans (e.g., grid modernization, renewable‑energy projects) and the proportion of cash‑flow earmarked for those investments.
Regulatory outlook (recent rate‑case outcomes, any dividend‑restriction provisions).
Historical dividend record (has Avista cut or suspended dividends in the past?).

How to Obtain the Needed Data

SEC filings – Form 10‑K (annual report) and Form 10‑Q (quarterly report) will contain:
- Consolidated cash‑flow statements (OCF, investing cash‑flow, FCF).
- Income statements (net income, EPS).
- Balance sheet (debt, capital‑expenditure commitments).
Management discussion & analysis (MD&A) – Provides forward‑looking statements on cash‑flow, capex, and dividend policy.
Investor presentations / conference call transcripts – Often include explicit dividend‑coverage ratios and management’s view on sustainability.
Analyst research reports – May already calculate payout ratios and forecast cash‑flow coverage.
Regulatory filings – State public‑utility commissions may publish rate‑case decisions that affect earnings and dividend policy.

A Practical “Rule‑of‑Thumb” Check (once the data is in hand)

Metric	Sustainable threshold (typical for utilities)
Cash‑flow payout ratio (Div/ OCF)	≤ 50 %
Free‑cash‑flow coverage (FCF ÷ Div)	≥ 1.5
Debt‑to‑EBITDA	≤ 3.0 (lower is better)
Capex‑to‑OCF	≤ 30 % (leaving headroom for dividend)
Dividend growth vs. earnings growth	Dividend growth ≤ earnings growth (to avoid “earnings‑drain” dividends)

If Avista’s actual ratios fall comfortably inside these ranges, the $0.49 quarterly dividend can be considered sustainable under current conditions. If any ratio is near or above the thresholds, the dividend could be vulnerable to cuts, especially if cash‑flow volatility or regulatory headwinds increase.

Bottom Line

From the press release alone: We cannot definitively answer whether the $0.49 quarterly dividend is sustainable.
What you need to do next: Pull Avista’s latest 10‑K/10‑Q, examine OCF, FCF, earnings, debt, and capex, then compute the payout ratios and compare them to the “sustainable” benchmarks listed above.
Typical utility outlook: Because Avista operates in a regulated environment, cash‑flows are historically stable, which often supports steady dividends. However, utilities also face large, predictable capex programs and periodic rate‑case outcomes that can tighten cash‑flow margins. The dividend’s sustainability will hinge on whether the cash‑flow after capex and debt service still comfortably exceeds the $0.49 per‑share payout.

If you can provide the missing financial figures (e.g., OCF per share, net income per share, debt levels, capex plans), I can run the numbers and give you a precise sustainability assessment.