Energy utility,
Wisconsin Energy Corporation
(
WEC
) has decided to share more profits with its shareholders. The
Board of Directors announced its intention to increase the
quarterly dividend rate to 30 cents per share from the current
payout of 26 cents per share.
The new quarterly dividend of 30 cents is expected to be
distributed on March 1, 2012, to shareholders of record on February
14, 2012. The new annualized dividend rate of $1.20 per share will
reflect a growth of 15.4% from the previous annual rate of $1.04
per share.
Wisconsin will need another $9.4 million per quarter to pay the
increased dividend to its shareholders if the share count remains
unaltered. Year-to-date free cash flow of the company is $215.4
million, which will support the increased payment.
The dividend payout ratio of the company, trailing twelve
months, is 43.6%. The company targets a dividend payout ratio of
60% by the end of 2015 and this hike is a step closer to that
long-term goal.
Wisconsin Energy has a consistent track record of paying
quarterly dividends. The prior dividend of 26 cents was paid on
March 2011 on a stock-split adjusted basis.
Wisconsin Energy has been performing well and its earnings per
share have exceeded our expectation in the preceding four quarters.
On top of it Wisconsin's long-term "Power the Future" plan has been
a major hit and added 3 cents to earnings in the third quarter
2011.
The market also reacted positively to the dividend hike
announcement. Yesterday's closing price of $33.26 reflected a 0.24%
spurt from the previous day's close.
We believe that in a highly regulated utility industry,
consistent dividend payment is a sure shot way to keep the
investors interested in the stock. The increased dividend payment
also helps to attract new investors in a time when the company
needs to generate additional funds for capital investments.
Wisconsin Energy retains a Zacks #2 Rank, which translates into
a short-term Buy rating. The company competes with
Xcel Energy Inc.
(
XEL
), which also has a Zacks #2 Rank.
Based in Milwaukee, Wisconsin, Wisconsin Energy, through its
subsidiaries, generates and distributes electricity in
Southeastern, East Central, and Northern Wisconsin, as well as in
the Upper Peninsula of Michigan. The company also distributes
natural gas.
WISC ENERGY CP (
WEC
): Free Stock Analysis Report
XCEL ENERGY INC (
XEL
): Free Stock Analysis Report
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