- 08 декабря 2017, 17:14
- Zacks Investment Research
WEC Energy Group’s WEC board of directors recently announced plans of raising quarterly dividend on its common stock to 55.25 cents per share in the first quarter of 2018. This represents an increase of 3.25 cents per share or 6.25% over the current quarterly rate.
Post the hike, the company’s new annualized dividend will amount to $2.21 per share of common stock, up from 52 cents of common stock distributed earlier. This revised quarterly stock dividend is expected to be payable Mar 1, 2018, to stockholders of record on Feb 14, 2018.
WEC Energy’s Regular Dividends Hikes
Per management, this plan to raise the quarterly dividend is in line with the company's long-term earnings growth objective. Notably, the company expects to witness long-term earnings per share growth at an average annual rate of 5-7%.
WEC Energy has been a consistent performer with its earnings beating the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 3.08%. Meanwhile, this utility has been gaining steadily from increased customers in the last few quarters, which in turn has been boosting its revenue growth. Evidently, at the end of third-quarter 2017, the company gained from an additional of 9,000 electric and 18,000 natural gas customers compared with the year-ago quarter.
Consequently, these gains got translated into substantial earnings growth, which have encouraged it to reward its shareholders by consistent dividend hike at regular intervals. In this line ,the company hiked annual dividend rate to $2.08 from fourth-quarter 2015 level of $1.98 in Jan 2017, reflecting an increase of 5.1% return value to shareholders. Notably, the company paid $492.4 million in dividends during the first nine months of 2017, an increase of $23.8 million from the same period last year. Moreover, it boasts a dividend yield of 3.04% much higher than the S&P 500’s growth of 1.77%.
Going ahead, the company is currently projecting annual dividends to grow in tandem with earnings and a payout ratio of 65-70%. We anticipate these factors to contribute significantly toward the company’s performance and bode well with its long term strategies as well.
Why are Dividend Hikes Regular for Utilities?
Utilities like WEC Energy, Ameren Corp AEE and Atlantic Power Corporation AT enjoy more or less stable earnings, owing to endless need for electricity and utility services, which primarily drives the revenues of the Utility sector. This helps the stocks in this space to enjoy a steady flow of revenues.
Owing to the nature of steady income generation, these stocks tend to generate consistent profits and reward shareholders with high dividends and WEC Energy is no exception. In line with this, another utility, PNM Resources, Inc. PNM recently announced that its board of directors has approved an annual dividend hike of 9.3% for the company’s common stocks in December 2017. (Read more:PNM Resources Rewards Investors, Ups Annual Dividend by 9.3%)
WEC Energy has outperformed the industry in the last three months. The company’s shares gained 3.9%, compared with the industry’s growth of 0.2%. The outperformance can be attributed to the company’s strong performance owning to increased demand by customer additions.
Zacks Rank & Key Picks
WEC Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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