CMS Energy Corporation (CMS) has increased its dividend by 6.25%, bringing the annualized dividend to $1.02 per share from the previous payout of 96 cents per share. The 6 cents increase in the annual dividend reflects successful execution of the company's business strategy.
CMS Energy will now pay a quarterly dividend of 0.255 cents per share compared with the prior quarterly dividend of 24 cents per share. The announced first quarter dividend will be paid on Feb 28, 2013, to shareholders of record at the close of business on Feb 8, 2013.
This is the seventh dividend increase of CMS Energy. The company has increased its last quarterly dividend by 3 cents from 21 cents to 24 cents in Jan 2012. The current dividend payout brings the annual dividend yield to 4.04%. The increase will keep CMS Energy’s payout ratio in line with the average of its utility peers.
In the long term, CMS Energy expects annual earnings growth to be in the range of 5.0% to 7.0%. The company plans to continue to increase its dividend with increase in earnings.
Besides paying substantial dividends, CMS Energy intends to benefit its customers and shareholders by making capital investments. Currently, the company plans to invest approximately $7 billion in its operations through 2017. Apart from improving the environment, these investments would bring in operational excellence.
In order to move in line with its strategy, CMS Energy recently announced that it intends to build a 700 megawatt (“MW”) new natural gas-fired power plant in Genesee County. The estimated cost of the project is $750 million.
Jackson, Michigan-based CMS Energy is the holding company of Consumers Energy Company (Consumers) and CMS Enterprises Company (Enterprises). Consumers is a electric and gas utility company that provides electricity and natural gas to Michigan’s residents, and serves customers in all 68 counties of Michigan’s Lower Peninsula.
CMS Energy is expected to release its fourth quarter and full year 2012 results on Feb 18, 2013. The Zacks Consensus Estimates for fourth quarter and full year 2012 currently stands at 24 cents per share and $1.54 per share, respectively.
CMS Energy expects to have sufficient capacity and sources of liquidity to fund its investment-based growth plans going forward. Going forward, key growth drivers of the company include its stable electric and gas utility operations, favorable regulatory policies in Michigan, higher rates and incremental dividend.
However, unfavorable macro backdrop, lower demand for electricity and pending regulatory cases remain a matter of concern. The company presently retains a short-term Zacks Rank #3 (Hold).
Other energy providers that have recently increased their dividend to compete within the industry are CenterPoint Energy, Inc. (CNP) that increased its dividend by 2.5%, ALLETE, Inc. (ALE) raised its dividend by 3.3% and Dominion Resources Inc. (D) upped its dividend by 6.6%.
ALLETE INC (ALE): Free Stock Analysis Report
CMS ENERGY (CMS): Free Stock Analysis Report
CENTERPOINT EGY (CNP): Free Stock Analysis Report
DOMINION RES VA (D): Free Stock Analysis Report
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