OGE Energy Corporation (OGE), a distributor of natural gas and electricity, primarily in the South Central United States, has increased its quarterly dividend by 4.67%, bringing the annualized dividend to $1.57 per share from the previous payout of $1.50 per share.
The dividend increase is effective from the first quarter of 2012. The quarterly dividend, after the hike, will come to 39.25 cents per share, up from the prior payment of 37.5 cents per share. This increased quarterly dividend will be payable on January 30, 2012, to shareholders of record as on January 10, 2012.
The company has been continuously paying dividends for the last sixty-four years. The last increase was in December 2010 when the company upped the annual payout to $1.50 per share from $1.45 earlier.
The company believes that a large number of its shareholders are dependent on its dividends for a portion of their income. It expects that cash generated from operations, proceeds from the issuance of long- and short-term debt and funds received from OGE Energy from proceeds from the sale of its common stock to the public through OGE Energy's Automatic Dividend Reinvestment and Stock Purchase Plan will be sufficient to meet anticipated cash needs and to fund future growth opportunities over the next three years.
Last month OGE Energy reported its third quarter 2011 results. In the reported quarter, the company with pro forma earnings of $1.80 per share topped the Zacks Consensus Estimate of $1.76. The results also comfortably beat the year-ago earnings of $1.65 per share.
Total current assets at the end of September 30, 2011, were $643.2 million and long-term debt was $2,039.2 million. Net cash provided by operating activities for the nine months ended September 30, 2011, was $344.8 million as compared to $345.1 million for the nine months ended September 30, 2010.
OGE Energy Corporation is the largest electric utility in Oklahoma, with well-positioned regulated utility and unregulated midstream gas businesses. The company operates in a strong Oklahoma economy, offers a high dividend yield and employs ongoing infrastructure improvement programs.
However, we remain concerned about the volatility in its commodity business and pending regulatory cases, along with the unfavorable macro backdrop. The company presently retains a short-term Zacks #2 Rank (Buy) rating. We have a long-term Neutral recommendation on the stock.
OGE Energy Corporation distributes natural gas and electricity through its subsidiaries(Oklahoma Gas and Electric Company or OG&E, and Enogex). The company operates through four business segments – electric utility, natural gas transportation and storage, natural gas gathering and processing and natural gas marketing. The company generally competes with Entergy Corporation (ETR) and ONEOK Inc. (OKE).
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