CMS Energy Tops In Dividend Growth Rate

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Among the stocks in the Utility Leaders screen in Monday's IBD,CMS Energy ( CMS ) is No. 1 in dividend growth rate.

CMS has tripled its quarterly payout from 9 cents a share in late 2008 to 27 cents in February. The annualized yield is about 3.8%.

The company provides natural gas and electric utility services in Michigan. CMS's natural gas system is the fourth-largest in the U.S., according to the company.


Chief Financial Officer Thomas Webb noted at the Jan. 30 earnings call that "key economic indicators like GDP growth and unemployment in our major service area are stronger than Michigan and in the U.S."

Being stronger than Michigan statewide might not sound like much, but Michigan's corporate tax climate is improving. Gov. Rick Snyder was a venture capitalist and presumably knows what impedes growth.

According to a Tax Foundation study released in October, Michigan's corporate tax now ranks No. 9 in the U.S., thanks to tax changes, after being the second-worst in the U.S., or 49th, in 2011.

A strong economic base can help utilities grow revenue and earnings.

Earnings jumped 48% in Q4, and that growth came on a hard comparison. In Q4 a year ago, earnings increased 67%.

Annual earnings are more utility-like. The five-year growth rates are 7% for earnings and flat for revenue.

CMS expects 1.5% revenue growth this year.

Pretax margin was 11.5% in 2013, the highest in at least nine years.

Funds upped their stake in 2013 from 828 funds holding 134 million shares to 914 funds holding 144 million shares.

The stock has been in a saucer pattern since marking a high in May -- finding support just under 26 and resistance just over 28. CMS cleared a handle entry at 28.93, but then slipped back under the buy point.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CMS

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