Wisconsin Energy Hikes Dividend - Analyst BlogFriday, December 07, 2012
Wisconsin Energy Corporation (WEC) has intended to increase its quarterly dividend by 13.3% to 34 cents per share from prior-year payment of 30 cents per share. This dividend increase is effective from the first quarter of 2013 and will likely be payable on March 1, 2013 to shareholders of record as of February 14, 2013.
As a result of this revision, Wisconsin Energy is bringing its annualized dividend to $1.36 per share from the previous payout of $1.20 per share. Post increase, the annual dividend yield will be 3.6%.
Last time, the company had increased its dividend in December 2011. The annual dividend payout upped 15.4% to $1.20 per share from $1.04 per share earlier. Wisconsin Energy values its owners and has been trying to increase their income by hiking the dividend payment each year for the last 15 years.
It is evident from Wisconsin Energy’s dividend-distribution history that the company is always on the lookout for maximizing its shareholders’ wealth and is targeting to reach a dividend payout ratio of 60% of earnings in 2014.
In third-quarter 2012, the company’s cash flow from operating activities was $992.4 million compared with $827.6 million in the year-ago quarter. We believe strong operating cash flow position and a credit facility of approximately $1.2 billion will be sufficient to meet anticipated cash needs and fund future growth opportunities over the next couple of years.
The market reacted negatively toward the dividend hike and the share price declined 0.45% and closed at $37.64 as of December 6, 2012. The dividend in 2011 grew 15.4%, while it spiked 13.3% in the current year. We believe strong performance of the company have increased investor expectation while the growth in dividend rate failed to satisfy the same.
Wisconsin Energy’s third-quarter 2012 earnings per share of 67 cents were 21.8% higher than year-ago results and 10 cents higher than the Zacks Consensus Estimate. The Zacks Consensus Estimate for quarterly revenue was $32.7 million higher than the actual figure of $1.04 billion, which was down 1.28% year over year from $1.05 billion. In addition, the company reaffirmed its full-year 2012 earnings guidance in the range of $2.31 - $2.33 per share.
Recently, another utility provider OGE Energy Corporation (OGE) increased its quarterly dividend by 6.37% to 41.75 cents per share from the prior payment of 39.25 cents per share. The annualized dividend will be $1.67 per share from the earlier payout of $1.57 per share.
Wisconsin Energy continues to expand and diversify its renewable as well as less-emission generating assets. Last week, the company entered into the joint-ownership and air quality control agreements with the Wolverine Power Cooperative and continues to progress well at its 50-megawatt biomass-fueled power plant in northern Wisconsin. These efforts will enable the company to meet the U.S Environmental Protection Agency regulations.
Milwaukee, Wisconsin-based Wisconsin Energy Corporation engages in generation and distribution of electricity in southeastern, east central, and northern Wisconsin, and Upper Peninsula of Michigan. With a market capitalization of $8.66 billion, the company has 4,595 full time employees and currently has a short-term Zacks #2 Rank (Buy rating).
OGE ENERGY CORP (OGE): Free Stock Analysis Report
WISC ENERGY CP (WEC): Free Stock Analysis Report
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