ALLETE, Inc.’s (ALE) shares rose around 1% to $58.79 on Jan 26, 2015 from Friday’s closing, following the company’s board’s announcement of a 3.1% sequential hike in its quarterly dividend rate. The revised dividend of 50.5 cents per share will be distributed on Mar 1 to shareholders of record as on Feb 16.
This increases ALLETE’s annual dividend rate to $2.02, which reflects a yield of 3.4% based on the closing price of $58.79 on Jan 26, significantly higher than the industry average of 2.2%.
ALLETE has a stable dividend payout history and strives to increase the same annually. The last quarterly dividend hike was made in March 2014, when it was increased 3.2% to 49 cents from the previous payout.
ALLETE maintains a stable liquidity position backed by efficient cash generating capacity. As of Sep 30, 2014, the company had a cash balance of $150.5 million and $400.3 million available under consolidated bank lines of credit. The company’s operating cash flow during the first nine months of 2014 stood at $212.1 million, up 12.3% year over year.
In addition to paying dividends, ALLETE continues to expand its scale of operations by building infrastructure and focusing on renewable portfolio. The company plans to invest a total of around $1.68 billion between 2014 and 2018, with a projected allocation of roughly $1.57 billion for regulated ventures.
ALLETE recently started operations at the Bison 4 Wind Energy Center, a 205-megawatt capacity power plant, and completed the acquisition of a wind-generation facility in Storm Lake, IA. The company’s strong project pipeline, coupled with a steady flow of long-term contracts, will enable it to meet fund requirements for dividend payments.
ALLETE currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include CMS Energy Corp. (CMS), Northeast Utilities (NU) and PG&E Corp. (PCG), each carrying a Zacks Rank #2 (Buy).
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