OGE Energy Boosts Dividend Again - Analyst BlogThursday, November 29, 2012
OGE Energy Corporation (OGE), a distributor of natural gas and electricity, primarily in the South Central United States, has increased its quarterly dividend by 6.37%, bringing the annualized dividend to $1.67 per share from the previous payout of $1.57 per share.
The dividend increase is effective from the first quarter of 2013. The quarterly dividend, after the hike, will come to 41.75 cents per share, up from the prior payment of 39.25 cents per share. This increased quarterly dividend will be payable on January 30, 2013, to shareholders of record as of January 10, 2013.
We note that the company understands the value of dividends for its shareholders. Therefore, the company has been continuously paying dividends for the last sixty-five years. The last increase was in December 2011 when the company upped the annual payout to $1.57 per share from $1.50 earlier.
OGE Energy believes that a large number of its shareholders are dependent on its dividends for a portion of their income. The company expects 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.
In November this year, OGE Energy reported third-quarter 2012 earnings of $1.87 per share, beating the Zacks Consensus Estimate by 4 cents per share. The results were also above the year-ago figure of $1.80 per share. OGE Energy’s operating revenues of $1.11 billion were down from the year-ago figure of $$1.21 billion.
Total current assets at the end of September 30, 2012 were $689.8, down $46.6 million at the end of September 30, 2011. Long-term debt as of September 30, 2012 was $2,050.2 million versus $2,039.2 million as of September 30, 2011.
Recently, one of the company’s peers, Alliant Energy Corporation (LNT) also increased its annual dividend by 8 cents from $1.80 to $1.88 per share during its third- quarter earnings call.
OGE Energy operates in a strong Oklahoma economy and employs ongoing infrastructure improvement programs. The company is doing well with respect to its dividend yield and earnings. With plans to invest $3.8 billion over 2012–2016, the company is pursuing an aggressive energy efficiency program, investing in renewable energy technologies and upgrading its infrastructure. The company is also focused on developing renewable energy projects and upgrading its distribution system.
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 #3 Rank (Hold) that corresponds with our 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.
OGE Energy’s other peers that are involved in generation, transmission, distribution, and sale of electricity are SCANA Corp. (SCG) and Hawaiian Electric Industries Inc. (HE).
HAWAIIAN ELEC (HE): Free Stock Analysis Report
ALLIANT ENGY CP (LNT): Free Stock Analysis Report
OGE ENERGY CORP (OGE): Free Stock Analysis Report
SCANA CORP (SCG): Free Stock Analysis Report
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