Xcel Energy Inc. (XEL) has announced that it will pay an incremental dividend in first- quarter 2014. The board of directors has increased the quarterly dividend rate by 7.1% sequentially and 11.1% year over year to 30 cents per share. The increased dividend will be paid on Apr 20, 2014 to stockholders of record as of Mar 20.
On an annualized basis, Xcel Energy’s dividend rate will come to $1.20 per share. The annual dividend yield will be 4.1%, higher than the industry average of 2.3%.
Xcel Energy’s practice of distributing incremental dividends supports its commitment to improve shareholders’ value. It is evident from the last few years’ dividend payment history that the company increases dividend rate once in a year.
The last dividend hike was in Jun 2013 when it was increased 3.7% to 28 cents from the earlier payout of 27 cents per share. In the long term, Xcel Energy plans to raise the average annual dividend in the range of 4% – 6%.
As of Jan 28, 2014, Xcel Energy had available liquidity of approximately $1.3 billion. A stable financial position helps the company to meet its anticipated cash requirements for dividend payment and future projects.
Xcel Energy is currently working on expanding its traditional as well as renewable fuel-fired asset base, while improving existing infrastructure to provide reliable services to the customers. The company invested approximately $3.4 billion in 2013 as capital expenditure and plans to spend $14.1 billion within a time span of 2014 – 2018. The company’s steady utility infrastructure expansion program is expected to allow it to boost its scale of operations, thereby meeting increased customer demand.
Xcel Energy currently has a Zacks Rank #2 (Buy). Other players in the utility industry, looking equally good at current levels include Portland General Electric Co. (POR), CMS Energy Corp. (CMS) and Exelon Corp. (EXC). While Portland General Electric holds a Zacks Rank #1 (Strong Buy), CMS Energy and Exelon carry a Zacks Rank #2 (Buy).
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