Electric utility provider Wisconsin Energy Corp. (WEC) announced 3.25 cent (or 8.3%) hike in its quarterly cash dividend to 42.25 cents per share for the fourth quarter of 2014. The increased dividend will be paid on Mar 1, 2015, to shareholders of record as of Feb 13, 2015.
This Zacks Rank #2 (Buy) company has an impressive dividend track record. The company has consistently paid dividends to its shareholders for the past seven decades or so. Wisconsin’s annual cash dividend now stands at $1.69 per share, an increase of 13 cents from the prior year.
Milwaukee, WI based Wisconsin Energy targets a payout ratio in the band of 65%–70% by 2017.Wisconsin’s current dividend yield of 3.1% is higher than the industry average of 2.28%.
Wisconsin Energy’s operating cash flow in the first nine months of 2014 was $1,035 million, marginally lower than the prior year. Allowing for the number of shares outstanding to remain unchanged till the record date, the company will have to shell out $95.3 million for paying the fourth quarter dividends.
While Wisconsin Energy has increased its dividend payout, another electric utility, FirstEnergy Corp. (FE) has slashed its annual dividend by almost 35% to $1.44 per share from $2.20 per share in 2013. The dividend cut was a result of rising debt levels and a volatile unregulated power market.
Despite investing substantially to install pollution control equipment at its power plants, convert fuel source from coal to natural gas at some facilities and retire certain coal units, coal still remains the primary fuel for Wisconsin Energy’s mode of power generation.
With the Environmental Protection Agency’s proposal to curb carbon emissions by 30% by 2030 from the 2005 level expected to come into effect by the middle of this year, sustaining a high dividend rate and increasing the payout is a matter of concern.
Other well-ranked stocks in the utility space include Huaneng Power International, Inc. (HNP) and PG&E Corporation (PCG). Both stocks currently sport a Zacks Rank #1 (Strong Buy).
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