WEC Energy Group WEC announced that its board of directors is planning to increase dividends by 6.9%. The new quarterly dividend will be 89.25 cents per share compared with the previous quarter’s 83.5 cents. The new dividend will be payable on March 1, 2025, to stockholders of record as of Feb. 14, 2025.
This hike is in sync with the company’s ongoing plan targeting a dividend payout ratio of 65-70% of earnings. The increased dividend rate resulted in an annualized dividend of $3.57 per share compared with the previous level of $3.34. The current dividend yield is 3.42%, higher than the Zacks S&P 500 composite's average of 1.18%.
WEC Projects 2025 Earnings Growth
The company also provided its earnings guidance for 2025. It expects the bottom line to be in the range of $5.17-$5.27. This represents growth of 7.6% from $4.85, the midpoint of the company's 2024 adjusted earnings guidance. The Zacks Consensus Estimate for 2025 earnings is pinned at $5.23 per share, a tad higher than $5.22 per share, the midpoint of the company’s guidance.
The projected dividend for 2025 is in line with the company's long-term target to increase earnings per share (EPS) at a 6.5-7% CAGR.
Can Dividend Hikes Be Sustained by WEC Energy?
WEC Energy is gaining on the back of improving demand from large and small commercial and industrial (C&I) customers, as well as that from the residential space. On average, more than 60% of the company’s electricity is sold to the C&I group. Hence, the improving demand from this group should boost WEC Energy’s performance.
Based on improving conditions in the company’s service area, it continues to witness an uptick in customer volumes. For the Wisconsin segment, the company expects weather-normalized electric sales to increase 4.5-5% and gas sales to grow 0.7-1% year over year during 2027-2029. Due to strong regional growth, WEC expects 1.8 gigawatts of additional load growth through 2029.
During 2025-2029, the company plans to invest $27.6 billion, out of which $9.1 billion will be invested in regulated renewable projects. A strong renewable portfolio should help the company serve its expanding customer base and boost its earnings performance.
WEC’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, The York Water Company YORW, Global Water Resources GWRS and Entergy Corporation ETR have raised their quarterly dividend rate by 4%, 1% and 6.2%, respectively.
The Zacks Consensus Estimate for York Water’s 2024 sales indicates an improvement of 5.6% from the previous year’s level. YORW’s current dividend yield is 2.42%.
The Zacks Consensus Estimate for Global Water Resources’ 2024 EPS implies an improvement of 7.7% from the previous year’s level. GWRS’ current dividend yield is 2.39%.
The Zacks Consensus Estimate for ETR’s 2024 EPS implies an improvement of 6.7% from the previous year’s level. ETR’s current dividend yield is 3.12%.
WEC’s Stock Price Performance
In the past six months, WEC Energy’s shares have risen 21.6% compared with the industry’s growth of 8.2%.
Image Source: Zacks Investment Research
WEC’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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