NiSource NI announced that its board of directors has increased dividends by 5.7%. The new quarterly dividend will be 28 cents per share compared with the previous quarter’s 26.5 cents. The new dividend will be payable on Feb. 20, 2025, to stockholders of record as of Feb. 3, 2025.
The increased dividend rate resulted in an annualized dividend of $1.12 per share compared with the previous level of $1.06. The company expects to deliver a 9-11% annual return to shareholders over the long term. The current dividend yield is 2.82%, higher than the Zacks S&P 500 composite's average of 1.18%.
Can NI Stock Sustain Dividend Hikes?
The company is working on a long-term utility infrastructure modernization program. NiSource projects an investment of $19.3 billion for the 2025-2029 period. It expects an annual rate base growth of 8-10% during 2025-2029, driven by its capital expenditures.
NI’s planned regulated investments should further improve the reliability and safety of its services and provide efficient electric and natural gas services to its increasing customer base. More than 75% of NiSource’s capital expenditure starts providing returns in less than 18 months of investment.
NiSource’s earnings are benefiting from the new electric and gas rates that came into effect in the previous years. The company is also gaining from its cost-saving initiatives and expects to lower operation and maintenance (O&M) expenses. These cost-saving measures should boost its margins over the long term.
NI’s project Apollo achieved its goal of more than $50 million of cost savings initiatives in 2023. It observed and incorporated efficiency by performing safer, better, more efficient and low-cost operations. The project is expected to maintain flat O&M expenses through the five-year plan duration.
NiSource’s growth prospects and ability to further enhance its performance indicate that management will have enough funds to sustain its shareholder-friendly initiatives in the future.
Utilities’ Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
In the past few months, ONE Gas OGS, WEC Energy Group WEC and The York Water Company YORW have raised their quarterly dividend rate by 1%, 6.9% and 4%, respectively.
The Zacks Consensus Estimate for ONE Gas’ 2025 earnings per share implies an improvement of 9.7% year over year. OGS’ current dividend yield is 3.81%.
The Zacks Consensus Estimate for WEC Energy’s 2025 sales indicates an improvement of 5.6% year over year. WEC’s current dividend yield is 3.43%.
The Zacks Consensus Estimate for York Water’s 2025 sales implies an improvement of 5.3% year over year. YORW’s current dividend yield is 2.91%.
NI’s Stock Price Performance
In the past three months, shares of the company have risen 6.6% against the industry’s decline of 9.4%.
Image Source: Zacks Investment Research
NI’s Zacks Rank
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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See This Stock Now for Free >>NiSource, Inc (NI) : Free Stock Analysis Report
WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
The York Water Company (YORW) : Free Stock Analysis Report
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
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