Ameren Corporation AEE announced a 3.7% hike in its quarterly cash dividend, bringing the annualized payout to $1.70 per share, up from $1.64 paid earlier.
The dividend increase will be effective from the fourth quarter of 2015. The raised dividend will amount to 42.5 cents per share from the prior payment of 41 cents. This amount will be paid on Dec 31, 2015, to shareholders of record as of Dec 9, 2015.
With a market cap of $10.46 billion, this St. Louis-based company generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois.
Utilities have been known to pay dividends consistently, thereby retaining the confidence of yield-hungry investors and proving the sector's defensive characteristics. Ameren is no exception to this trend.
Ameren Corp. is also engaged in systematic investments in growth projects and infrastructure upgrade activities. In the first half of 2015, the company spent $556 million as capital expenditure, up 11% from the prior-year level.
Ameren plans to complete several important projects in 2015, which include a new reactor vessel head at the Callaway Energy Center and an important substation in St. Louis. Under the Modernization Action Plan, the company intends to install around 140,000 electric and 73,000 gas meters at its service territory by 2015. Scheduled completion of these projects will enable the company to provide reliable services to its customers, besides meeting increasing demand.
Ameren operates a rate-regulated business and has a stable earnings base serving 2.4 million electric customers and more than 900,000 natural gas customers in a 64,000-square-mile area. The company is expected to witness modest earnings growth at its core operations. Focus on its regulated utilities will help to meet the projected compound annualized earnings growth of 7–10% within a time span of 2013 to 2018.
Zacks Rank
AEE Corp. currently holds a Zacks Rank #2 (Buy). Other favorably placed stocks in the power sector are Brookfield Infrastructure Partners L.P. BIP, American Electric Power Co., Inc. AEP and Consolidated Edison, Inc. ED. While Brookfield sports a Zacks Rank #1 (Strong Buy), American Electric and Consolidated Edison carry a Zacks Rank #2 (Buy).
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