OGE Energy Corporation
), a distributor of natural gas and electricity, primarily in the
South Central United States, has increased its quarterly dividend
by 6.37%, bringing the annualized dividend to $1.67 per share
from the previous payout of $1.57 per share.
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The dividend increase is effective from the first quarter of
2013. The quarterly dividend, after the hike, will come to 41.75
cents per share, up from the prior payment of 39.25 cents per
share. This increased quarterly dividend will be payable on
January 30, 2013, to shareholders of record as of January 10,
We note that the company understands the value of dividends for
its shareholders. Therefore, the company has been continuously
paying dividends for the last sixty-five years. The last increase
was in December 2011 when the company upped the annual payout to
$1.57 per share from $1.50 earlier.
OGE Energy believes that a large number of its shareholders are
dependent on its dividends for a portion of their income. The
company expects cash generated from operations, proceeds from the
issuance of long- and short-term debt and funds received from OGE
Energy from proceeds from the sale of its common stock to the
public through OGE Energy's Automatic Dividend Reinvestment and
Stock Purchase Plan will be sufficient to meet anticipated cash
needs and to fund future growth opportunities over the next three
In November this year, OGE Energy reported third-quarter 2012
earnings of $1.87 per share, beating the Zacks Consensus Estimate
by 4 cents per share. The results were also above the year-ago
figure of $1.80 per share. OGE Energy's operating revenues of
$1.11 billion were down from the year-ago figure of $$1.21
Total current assets at the end of September 30, 2012 were
$689.8, down $46.6 million at the end of September 30, 2011.
Long-term debt as of September 30, 2012 was $2,050.2 million
versus $2,039.2 million as of September 30, 2011.
Recently, one of the company's peers,
Alliant Energy Corporation
) also increased its annual dividend by 8 cents from $1.80 to
$1.88 per share during its third- quarter earnings call.
OGE Energy operates in a strong Oklahoma economy and employs
ongoing infrastructure improvement programs. The company is doing
well with respect to its dividend yield and earnings. With plans
to invest $3.8 billion over 2012-2016, the company is pursuing an
aggressive energy efficiency program, investing in renewable
energy technologies and upgrading its infrastructure. The company
is also focused on developing renewable energy projects and
upgrading its distribution system.
However, we remain concerned about the volatility in its
commodity business and pending regulatory cases, along with the
unfavorable macro backdrop. The company presently retains a
short-term Zacks #3 Rank (Hold) that corresponds with our
long-term Neutral recommendation on the stock.
OGE Energy Corporation distributes natural gas and electricity
through its subsidiaries (Oklahoma Gas and Electric Company or
OG&E, and Enogex). The company operates through four business
segments - electric utility, natural gas transportation and
storage, natural gas gathering and processing and natural gas
OGE Energy's other peers that are involved in generation,
transmission, distribution, and sale of electricity are
Hawaiian Electric Industries Inc.