Duke Energy Corp.
), a Charlotte, NC-based diversified energy company, announced a
1.5 cents or 2% year-over-year hike in its annual dividend payout
to $3.12 per share.
The quarterly cash dividend of 78 cents is payable on Sep 16 to
shareholders of record as of Aug 16. This is the 87th consecutive
annual dividend payment and also marks the 6th successive year in
which the company has lifted the dividend.
Based on the closing price of $66.12 on Jun 25, 2013, the
proposed dividend affirms a healthy yield of 4.7%. A steady
dividend payout is part of the long-term strategy of Duke Energy
to provide attractive risk-adjusted returns to its stockholders
compared with its peers. In addition, decent dividend increases
at periodic intervals from the company have been one of its
Duke Energy's U.S. electricity and gas operations (spread over
the Carolinas, Florida, Indiana, Kentucky and Ohio) generate a
relatively stable and growing earnings stream. The company
remains focused on core utility operations to build its rate base
through capital expenditure investments.
Of late, the company has been investing in new plants, retiring
older plants as well as working on modernization of plants to
reduce emissions across its service area. Since 2007, the company
has invested approximately $6 billion in new plants and has
retired up to 6,800 megawatt (MW) of older coal capacity. All the
more, it has invested another $7.5 billion for plant upgrades.
Again, the company is also making investments to acquire assets
that promise profitability. Its acquisition of fellow North
Carolina based utility, Progress Energy Inc. spread the new
entity's stable U.S. electricity and gas operations over 7.1
million electric customers in Carolinas, Florida, Indiana,
Kentucky and Ohio.
Post-merger, Duke Energy dethroned Chicago-based
) to become the largest U.S. utility. It also helped Duke Energy
to build more power plants to meet future greenhouse-gas
emissions limits. We expect the merger to be a strategic fit and
keep the company's long-term goal of 4-6% earnings growth in good
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Looking at the earnings surprise history, the company has beaten
the Zacks Consensus Estimate in the past three out of four
quarters. The average positive earnings surprise in the trailing
four quarters comes to 3.6%.
The company currently has a Zacks Rank #3 (Hold). Other companies
that are well placed in the sector are
Companhia Paranaense de Energia
CPFL Energia S.A.
), both with a Zacks Rank #1 (Strong Buy).