OGE Energy Corp. (OGE), a distributor of natural gas and electricity, primarily in the South Central United States, has increased its quarterly dividend by 11%, bringing the annualized payout to $1.00 per share from 90 cents per share earlier. This increase would generate a dividend yield of 2.8% based on the current market price.
The dividend increase will be effective from the fourth quarter of 2014. The quarterly dividend, after the hike, will come to 25 cents per share from the prior payment of 22.5 cents per share. The increased quarterly dividend will be payable on Oct 30, 2014, to shareholders of record as of Oct 10, 2014.
The company generally increases its quarterly dividend rate once a year and it has been doing so for 67 consecutive years. Its prior dividend increase was made in the first quarter of 2014 when it paid dividends of $50 million as against no dividend payments in the year-ago quarter.
Also, the company announced its plan to grow the dividend by 10% annually from 2015 through 2019. Utilities have been known to pay dividends consistently, thereby retaining the confidence of yield hungry investors and proving the sector's defensive characteristics.
OGE Energy is the largest electric utility in Oklahoma, and its well-positioned regulated utility and unregulated midstream gas businesses carry low risk. Apart from expanding its traditional fuel-fired operations, OGE Energy is smart to leverage the topography of Oklahoma to develop wind-based energy assets. The company’s focus on expanding its renewable generation portfolio will help it to achieve regulatory compliance.
The company has plans to invest nearly $3 billion over the 2014–2018 time frame. We believe systematic capital investments will not only strengthen the existing infrastructure of the company but also make its operations more environment friendly.
The stable Oklahoma economy will also act as a catalyst to OGE’s operations. Unemployment in the state is significantly lower than the national average. In 2013, the company added approximately 9,000 customers. The resilience in the economy of its service territories bodes well for the company’s future growth. OGE Energy’s Smart Grid investments will also sustain customer satisfaction in the long term. In addition, lower-than-average electricity rates provide OGE Energy with significant scope for future growth.
OGE Energy currently has a Zacks Rank #3 (Hold). Other better-ranked players in the utility industry include Huaneng Power International, Inc. (HNP), IdaCorp, Inc. (IDA) and NRG Yield, Inc. (NYLD). All these stocks carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment