American Electric Power Co.
) has announced that its Board of Directors has increased its
quarterly dividend by 4.3%, bringing the annualized dividend to
$1.96 per share from the previous payout of $1.88 per share. The
board commented that the company is well-positioned for earnings
growth in the range of 4% to 6%.
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Following the hike, the company will now pay a quarterly dividend
of 49 cents as against the 47 cents paid earlier. The said
dividend will be paid on Jun 10, 2013, to shareholders of record
as of the close of business on May 10, 2013. The current dividend
generates a dividend yield of 3.87%.
American Electric had made its last dividend increase in Oct
2011. It had increased its quarterly dividend by 2.2% from 46
cents per share to 47 cents per share. It has been paying
dividends for the last 412 consecutive quarters.
The trend of dividend increase indicates the company's financial
strength. As of Dec 31, 2012, the company had cash and cash
equivalents of $279 million, up from $221 million as of Dec 31,
2011. In 2012, net cash flow from operating activities was
$3,804.0 million, up from $3,788.0 million in 2011.
At the meeting, the company also announced that it will increase
its capital investments to approximately $3.6 billion in 2013, up
from $3.1 billion in 2012. It intends to invest in the
development and operation of transmission assets and modernize
its generating fleet to comply with new environmental
The utility sector is known for its defensive nature and its
reputation as a dividend payer adds to its defensive stance. In
Public Service Enterprise Group
) Board of Directors announced a 1.4% increase in the dividend
bringing the quarterly payout to 36 cents per share from the
prior level of 35.5 cents. On an annual basis, the common stock
dividend offering comes to $1.44 per share, up from the prior
payment of $1.42 per share.
In Jan 2013, another stock in the space,
) announced that its Board of Directors has approved an increase
in the quarterly dividend rate by 1.5 cents. The annualized
dividend rate of the company will come to $1.90, up 3.3% from the
prior rate of $1.84.
American Electric is expected to release its first quarter 2013
results on Apr 26, 2013. The Zacks Consensus Estimate for first
quarter 2013 is currently at 81 cents per share, up an estimated
0.6% year over year.
American Electric is one of the largest investor-owned utility
holding companies in the country, catering to over 5 million
customers spread over 11 states. Going forward, the company
offers stable earnings through consistent performance in core
regulated operations, growth through transmission network
expansion and an above-average dividend yield. The company
presently retains a short-term Zacks Rank #2 (Buy).
Pike Electric Corporation
) also looks good in the space carrying a Zacks Rank #1 (Strong