DTE Energy (DTE) has announced it would increase the quarterly dividend rate to 62 cents per share, up approximately 3 cents from the current payout of approximately 59 cents per share.
The proposed hike would bring the annual dividend to $2.48, up 5.5% from the previous payout. The increased quarterly dividend will be paid on October 15, 2012 to shareholders of record at the close of business on September 17, 2012.
In May 2011, the company had increased its quarterly dividend by 5% to approximately 59 cents per share. In December 2011, one of the company’s peers, Wisconsin Energy Corporation (WEC) had announced a quarterly dividend increase to 30 cents per share versus its previous payout of 26 cents per share.
The company had released its first quarter 2012 earnings in April. At the end of first quarter 2012, cash and cash equivalents were $57 million, down from $197 million at the end of first quarter 2011. Despite a weak liquidity position, the company continues to maintain its trend of increasing the dividend and making capital investments. Moreover, in order to address the provisions of Michigan Public Act 295 of 2008, the company is planning to implement a 20-year renewable energy plan to deliver cleaner renewable electric generation to its customers and meet the state and national goals of increasing energy independence.
The company’s stable utility business and a complementary non-utility business allow DTE Energy to engage in shareholder friendly moves. Going forward, we expect the growth momentum to be maintained by higher rates for its regulated business, and an industry-high dividend yield.
However, we are currently concerned about the present unfavorable macro backdrop, lower demand for electricity, the dismal Michigan economy and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Detroit, Michigan-based DTE Energy is a holding company with subsidiaries engaged in regulated and unregulated energy businesses. Detroit Edison Company and Michigan Consolidated Gas Company are its largest regulated subsidiaries. DTE Energy also has four non-utility segments engaged in a variety of energy-related business. DTE Energy’s unregulated businesses include gas pipelines and storage, unconventional gas exploration, development and production, power and industrial projects and coal transportation and marketing, and energy marketing and trading operations.
DTE ENERGY CO (DTE): Free Stock Analysis Report
WISC ENERGY CP (WEC): Free Stock Analysis Report
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