California Water (CWT) Increases Dividend, Boosts Shareholders

California Water Service Group CWT announced that the board of directors has approved an 8.7% or 8 cents increase in the annual dividend. The annual dividend rate moved up to $1 per share from the previous-year rate of 92 cents. The new quarterly dividend of 25 cents per share is payable on Feb 18, 2022, to stockholders of record as of Feb 7, 2022.

The dividend increase marks California Water’s 55 consecutive annual dividend increases. The new annualized dividend reflects a dividend yield of 1.66%, which is better than the industry’s average of 1.58% and the Zacks S&P 500 composite’s 1.39%.

Can California Water Sustain Dividend Hike?

California Water will continue to make systematic investments to strengthen the infrastructure. It plans to invest $1.02 billion in the 2022-2024 period to strengthen the existing infrastructure. CWT is also boosting operations via organic and inorganic activities.

The company reaffirmed the 2021 capital expenditure within the $270-$300 million range. In July, the California Water Service unit filed an application with the California Public Service Commission, seeking approval for 2022-2024 infrastructure improvement programs, which also contain new rate designs.

The four acquisitions are pending to be closed following regulatory approvals, which will add up to 3,400 water connections and up to 4,700 waste water connections. The Rainier View acquisition, a decision of which awaits in the second quarter of 2022, will allow California Water to generate strong cash flows.

California Water has been benefiting from a rate increase and CWT’s rate base is expected to improve from $1.82 billion in 2021 to $2.74 billion in 2025. The ongoing expansion of the rate base will have a positive impact on its earnings over the long term.

Dividend Hikes in Utility Space

The stable performance and consistent earnings of utility companies allow them to share profits with shareholders through dividends. Apart from California Water, a few utilities have been distributing and increasing dividendsat regular intervals.

Spire Inc. SR has been paying out dividends consistently since 1946. Spire raised the annual dividend for fiscal 2022, marking the 19th consecutive year of increase. SR has increased 2022 dividend by 5.4% from $2.60 per share to $2.74.

Strong cash flows allow the utility to distribute dividends and increase the rate annually. Spire’s dividend hike is in line with the target payout ratio of 55-65%. Currently, Spire’s dividend yield is 4.2%, better than the Zacks S&P 500 composite’s yield of 1.39%. The long-term (three to five years) earnings growth of SR is 5.3%

WEC Energy Group WEC has increased 2022 dividend by 7.4% from $2.71 per share to $2.91. WEC Energy targets an annual dividend growth of 6-7% over the long termsubject to the board of directors’ approval. WEC has a current dividend yield of 3.1%, better than the Zacks S&P 500 composite’s yield of 1.39%.

The long-term earnings growth of WEC Energy is 6.3%. WEC has been paying out dividends consistently since 1988 and increasing the annual rate of dividends since 2010.

Edison International EIX has increased dividend by 4.1% from $2.69 per share to $2.80. It has a current dividend yield of 4.6%, better than the Zacks S&P 500 composite’s yield of 1.39%. The long-term earnings growth of Edison International is 3.71%. EIX has been paying out dividends consistently since 1910.

Zacks Rank and Price Performance

California Water Service currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past year, shares of CWT have rallied 10.1%, outperforming the industry’s 1.8% growth.

Image Source: Zacks Investment Research

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