) share price edged up 1.1% from the previous day's price,
closing at $49.98 per share on Jan 31, 2014. The marginal rise
was primarily due to the market's positive response to the
management's decision to increase its quarterly dividend rate. It
is evident from the last few years' dividend payment history that
ALLETE increases dividend rate once in a year. The market's
reaction was not that large as the increment in dividend was more
or less in the expected lines.
The board of directors of ALLETE increased the quarterly dividend
rate by 3.2% sequentially to 49 cents per share. The increased
dividend will be paid on Mar 1, 2014 to stockholders of record as
of Feb 14. On an annualized basis, ALLETE's dividend rate will
come to $1.96 per share. The annual dividend yield will be a
healthy 3.9%, higher than the industry average of 2.3%.
ALLETE's strategy of paying incremental dividends supports its
commitment to improve long-term value for shareholders. The last
dividend hike was in Jan 2013 when it was increased 3.3%
sequentially to 47.5 cents from the earlier payout of 46 cents
The company's cash flow from operating activities was $188.9
million during the first nine months of 2013 and the cash balance
was $164.5 million as of Sep 30, 2013. During the first nine
months of 2013, the company paid $57.2 million as dividends. The
strong cash flow generation will enable the company to arrange
for the fund required for incremental dividend payment.
ALLETE is currently working to develop its infrastructure, better
the quality of service and expand its customer base. In the first
nine months of 2013, the company invested $186.4 million under
its capital expenditure program and intends to spend $1,740
million through 2017.
ALLETE currently has a Zacks Rank #2 (Buy). Other players in the
utility industry, which look equally good at current levels,
Wisconsin Energy Corp.
CMS Energy Corporation
). Each stock carries the same Zacks Rank as ALLETE.
ALLETE INC (ALE): Free Stock Analysis Report
CMS ENERGY (CMS): Free Stock Analysis Report
EXELON CORP (EXC): Free Stock Analysis Report
WISC ENERGY CP (WEC): Free Stock Analysis
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