Minneapolis-based Xcel Energy Inc. (XEL) said that its Board of Directors has increased the second quarter dividend by nearly 3%. This raises the new dividend rate to 26 cents per share from 25.25 cents per share paid earlier.
Xcel Energy said the raised quarterly dividend will be paid on July 20, 2011, to shareholders of record as on June 23, 2011.
Xcel’s new annualized dividend rate comes to $1.04 per share from the previous annualized dividend rate of $1.01. The company’s second quarter dividend increase is consistent with its goal of growing the dividend 2%-4% annually.
Xcel Energy’s board recognizes the importance of the dividend to its shareholders. The rise in the dividend stems from the company’s strong balance sheet and robust operating results. As of March 31, 2011, the company had cash and cash equivalents of $1.0 billion and total debt of $9.8 billion, with a debt-to-capitalization ratio of 54%.
Further, Xcel Energy periodically issues debt and equity to refinance debt, fund operations and for other general corporate purposes. During the second half of 2011 the company plans to raise around $400 million through issue of bonds and unsecured notes. Also, the company may issue $75 million of equity through the Dividend Reinvestment and Stock Purchase Plan and various benefit programs in 2011.
Moreover, Xcel Energy smoothly executed on its strategy in the first quarter and remains on track to deliver 2011 ongoing earnings in the range of $1.65 – $1.75 per share. The company also continues to be on track to achieve its long-term EPS growth target of 5%-7%.
We are encouraged to see the company doing so well and sharing the benefits with its shareholders through increase in the dividend rate.
Among Xcel’s competitors, CenterPoint Energy Inc. (CNP) declared a quarterly dividend of 19.75 cents per share, while American Electric Power Co. Inc. (AEP) declared a dividend of 46 cents, both payable on June 10, 2011.
Xcel Energy currently retains a Zacks #4 Rank (short-term Sell rating). We maintain our long-tern Neutral rating on the stock.
Based in Minneapolis, Minnesota, Xcel Energy is a U.S. electricity and natural gas company, with operations in eight Western and Midwestern states.
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