) has announced that it will pay an incremental dividend in the
first quarter of 2014. The board of trustees has increased the
quarterly dividend rate by 6.8% year over year to 39.25 cents per
share. The increased dividend will be paid on Mar 31, 2014 to
stockholders of record as of Mar 3.
On an annualized basis, Northeast Utilities' dividend rate will
come to $1.57 per share. The annual dividend yield will be a
healthy 3.4%, higher than the industry average of 2.4%.
Northeast Utilities' strategy of paying incremental dividends
supports its commitment to maximize shareholder wealth. The last
dividend hike was in Feb 2013 when it increased 7.1% sequentially
to 36.75 cents per share from the earlier payout of 34.3 cents
During the first nine months of 2013, the company's net cash
flows provided by operating activities were $1.2 billion,
significantly higher than $0.8 billion in the year-ago comparable
period. The strong cash flow generation capacity enables the
company to pay incremental dividends.
Apart from paying regular dividends, the financial cushion
supports Northeast Utilities to expand its existing operations.
The company is currently in the middle of several projects,
including the Interstate Reliability Project, the Mid-Cape
Project and the Northern Pass Project. The company's strong
infrastructure expansion program is expected to allow it to
increase transmission capacity, thereby meeting increased
We note that several utility providers recently increased their
CMS Energy Corp.
) increased their dividends by 3.2% and 5.9% sequentially,
However, we are concerned about stringent regulations and an
over-reliance on transmission and distribution businesses, which
can challenge Northeast Utilities' future performance.
Northeast Utilities currently has a Zacks Rank #4 (Sell).
However, a better-ranked stock in the same sector is
Wisconsin Energy Corp.
) with a Zacks Rank #2 (Buy).
ALLETE INC (ALE): Free Stock Analysis Report
CMS ENERGY (CMS): Free Stock Analysis Report
NORTHEAST UTIL (NU): Free Stock Analysis
WISC ENERGY CP (WEC): Free Stock Analysis
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