We have maintained our Neutral recommendation on
DTE Energy Company
) on Sep 24, 2013.
Why the Reiteration?
DTE Energy is focused on improving its cost structure and
directing capital investments toward renewable generation,
utility infrastructure and environmental compliance assets. A
focus on cost structure and operational improvements will help
the utility attain a 5% - 6% long-term EPS growth target and
shareholder return in the range of 9% to 10%.
DTE Energy's strong balance sheet and cash flows provide
substantial financial flexibility and cushion in the present
challenging business environment. Moreover, the company continues
to return shareholder wealth through dividend payouts. The
company pays a quarterly dividend of 65.5 cents per share
generating a dividend yield of 3.97%. The company targets a
dividend payout ratio of 60.0% to 70.0%.
Key growth drivers for the company are its stable and growing
utilities, and its complementary non-utility businesses. Going
forward, the growth momentum will be maintained by higher
authorized rates for its regulated business and growth
opportunities in its un-regulated businesses.
Despite these positives, the present unfavorable macro backdrop,
lower demand for electricity, the slowly recovering economy in
Michigan, soft second quarter results and pending regulatory
cases remain matters of concern. The year-over-year decline in
the second quarter reflected lower weather-related electric
Other Stocks to Consider
DTE Energy presently has a Zacks Rank #4 (Sell). Stocks that are
worth considering in the space are
Alliant Energy Corp.
Brookfield Infrastructure Partners L.P.
Integrys Energy Group, Inc.
), all with a Zacks Rank #2 (Buy).
BROOKFIELD INFR (BIP): Free Stock Analysis
DTE ENERGY CO (DTE): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
INTEGRYS ENERGY (TEG): Free Stock Analysis
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