IDACORP Inc. IDA announced that the board of directors has approved a 6% increase in the quarterly dividend rate. Notably, the revised quarterly dividend will be 71 cents. The company’s new annualized dividend rate is $2.84 and the current dividend yield is 3.4%, better than the Zacks S&P 500 composite’s 1.6%.
IDACORP’s management has been annually raising the dividend rate over the past few years. It belongs to an exclusive group of companies that have raised dividend rate every year since 2012. The board of directors approved a dividend increase this month, leading to a 137% total increase in annualized dividend since 2012.
For the long term, the company’s management aims at upwardly revising the dividend rate by 5% or more. This would keep IDACORP near the upper end of the current target payout ratio between 60% and 70%.
Can IDACORP Sustain Dividend Hikes?
IDACORP’s regulated electric operations in Idaho generate a relatively stable earnings stream. Ongoing economic improvements in its service territories have helped the company in expanding the customer base. These factors are positively impacting its operating income.
It projects capital expenditure to be $1.6 billion in the 2020-2024 time period. Owing to systematic investments for strengthening the generation portfolio, Idaho Power Hydroelectric Generation will be able to cater to rising demand of the expanding customer base.
The company has undertaken initiatives to enhance financial strength and improve the core business. Notably, ongoing increase in the customer base and its steady performance pave the way for further increase in the annual dividend rate.
Zacks Rank & Key Picks
IDACORP currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include DTE Energy Company DTE, MGE Energy Inc. MGEE and Otter Tail Corporation OTTR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE Energy has a long-term (three to five years) earnings growth rate of 5.7%. The Zacks Consensus Estimate for 2020 earnings has increased 2.14% to $6.68 per share in the past 60 days.
MGE Energy has a long-term earnings growth rate of 4.4%. The Zacks Consensus Estimate for 2020 earnings has increased 5.2% to $2.62 per share in the past 60 days.
Otter Tail delivered an earnings surprise of 3.9% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has increased 4.7% to $2.22 per share in the past 60 days.
In the past three months, IDACORP’s shares have underperformed the industry it belongs to.
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