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Teco Is On Acquisition Trail And Offers 4.8% Dividend

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Tampa, Fla.-basedTeco Energy ( TE ) has some new factors shaping up.

In early September, the Florida-based diversified utility wrapped up the acquisition of Albuquerque-based New Mexico Gas Intermediate, the parent company of New Mexico Gas.

How big is this for Teco?

The acquisition adds 513,000 natural gas customers, boosting the number of regulated electric and gas customers to 1.5 million.

Teco CEO John Ramil said in a Sept. 3 news release that the acquisition "will be accretive to our earnings for the full year in 2015."

In May 2013, Teco announced the agreement to acquire the New Mexico utility. At that time, Ramil noted that the acquisition was "adding 50% to our customer base in a single transaction, and we expect it to provide opportunities for future growth in an attractive Sun Belt location. It will increase the percentage of earnings from regulated operations and reduce earnings volatility."

A second new factor that hasn't yet been settled is Teco's efforts to sell Teco Coal, a subsidiary that owns and operates coal-production facilities in Kentucky and Virginia.

Teco Coal accounts for roughly a sixth of Teco's total revenue. The coal market, though, is weak. There's no way to know when a sale might be accomplished.

Additional acquisitions are possible. At a conference call in July, Ramil said, "The areas that we would be interested in acquiring utilities would be the areas that we would expect to grow better than the national average." He added that natural gas provides growth opportunities "beyond just what regular population growth would give you."

Teco pays a quarterly dividend of 22 cents a share, a payout that hasn't changed since an increase in February 2012. On an annualized basis, the dividend represents a yield of nearly 4.9%.

Analysts expect Q3 earnings to grow 10% on a revenue pop of almost 13%. The company will report results before the open Oct. 31.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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