Laclede Group Boosted Dividend Even In Tough Times


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Many companies cut or suspended dividends during the 2008-09 recession to survive the worst slump since the Great Depression.

But Missouri-based gas utilityLaclede Group ( LG ) refused to cave in. It's paid a dividend every year since 1946. The latest increase, which took effect in January, marked the 11th straight annual hike.

The quarterly payout is now 44 cents a share, up 3.5% from 42.5 cents previously. The annual payout of $1.76 a share yields 3.6% at the current share price, well above the S&P 500 average of 1.9%.

Laclede provides natural gas to 1.13 million customers in Missouri. The company plans to expand beyond its borders with the acquisition of Alabama Gas, the biggest natural gas utility in the Yellowhammmer State, with more than 422,000 customers.

Laclede says the deal, which is expected to close by Sept. 30, will support further dividend increases.The company announced Aug. 7 that profit for its fiscal third quarter rose 22% from the same period a year earlier to 44 cents a share, the biggest gain since the fiscal third quarter of 2011 (which ended in June that year) and far above Wall Street estimates. Revenue jumped 46% to $241.8 million, building on similarly strong gains of 53% and 75% in fiscal Q1 and Q2, respectively.

"Positioned in a niche industry with high barriers to entry, this energy service holding company enjoys a strong competitive position in its area of operation," Zacks Equity Research said before the earnings results. "On top of this, the utility's recession-proof business model presents additional growth opportunities."

Laclede's earnings have been stable, as might be expected from a utility. The three-year earnings stability factor is 4 on a scale of 0 (most stable) to 99 (least stable). Its long-term dividend growth rate is 3%.

Meanwhile, the stock is trying to clear resistance at around 49. It's still well below its all-time high of 55.81 in November 2008.

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

This article appears in: Personal Finance , Investing Ideas

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