The board of directors of the electric utility
OGE Energy Corp.
) has approved an increase in the annual dividend rate by 6.5
cents or 7.8%. The revised quarterly dividend will be paid on Jan
30, 2014, to the holders of record at the close of business on
Jan 10, 2014.
The annualized dividend will come to 90 cents, with an annual
dividend yield of 2.6%, which is higher than the industry average
of 2.06%. The increase in the distributable income speaks of the
company's successfully executed investment growth strategy. The
company aims to disburse up to 60% of its normalized earnings as
On May 16, 2013, the board of directors had approved of a
two-for-one stock split, which came into effect on July 1,
2013. After adjusting for the stock split, the annual
dividend of the company came to 83.5 cents. Earlier, OGE Energy
had raised its annual dividend rate on Nov 28, 2012, by 6.4% to
$1.67 per share.
True to the defensive nature of all utilities, OGE Energy has
been paying dividends for the past 67 years. The company
continues to generate strong cash flow. In the first nine months
of 2013, cash flow was $351.2 million, with $119.2 million used
for dividend payouts. We believe the consistent cash flow
generation capability will enable the company to meet its
increased dividend payment obligation.
The company registered a positive earnings surprise of 16.1% in
the third quarter. The Street reacted positively to the earnings
beat with the Zacks Consensus Estimate for 2013 increasing 4.5%
in the last 30 days to $1.86 per share. This reflects projected
year-over-year growth of 5.1%. Given the strong earnings
performance, we expect OGE Energy to again revise its dividend
rate upwards in 2014 to reach its 60% payout target.
Other players in the utility industry, which look attractive at
current levels, include
Alliant Energy Corp.
Brookfield Infrastructure Partners L.P.
Black Hills Corp.
). All these stocks carry the same Zacks Rank as OGE Energy
BROOKFIELD INFR (BIP): Free Stock Analysis
BLACK HILLS COR (BKH): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
OGE ENERGY CORP (OGE): Free Stock Analysis
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