WEC Energy Group WEC has announced that its board of directors approved a 7.2% increase in the quarterly dividend rate. The revised quarterly dividend will be 78 cents, payable on Mar 1, 2023, to shareholders of record at the close of business on Feb 14. The company continues to target a dividend payout of 65 to 70% of earnings.
The company’s new annualized dividend rate is $3.12 per share, resulting in a dividend yield of 3.39%. The current dividend yield is better than the Zacks S&P 500 composite’s 1.63%.
Utilities’ History of Dividend Payment
The companies that are involved in providing utility services generally have stable operations and earnings. Consistent performance and the ability to generate cash flows allow utilities to reward shareholders with a regular dividend. WEC Energy Group has been distributing dividends for 322 consecutive quarters.
It is not the only company with a track record of consistent dividend payments. Utilities like Consolidated Edison, Inc. ED and The York Water Company YORW are also rewarding their shareholders with dividend payments for more than 100 years without fail.
The current dividend yields of Consolidated Edison and York Water Company are pegged at 3.4% and 1.8%, respectively.
Can We Expect Hikes in Coming Years?
In 2022, WEC completed a few acquisitions and entered into an agreement to acquire a few more renewables to expand its clean energy generation portfolio. A majority of the clean projects acquired have a long-term offtake agreement for all energy produced, which ensures a steady flow of earnings for the company.
Based on improving conditions in the company’s service area, WEC Energy continues to witness an uptick in customer volumes. The company expects weather-normalized electric and gas sales for the Wisconsin segment to be 0.7-1% each during the 2025-2027 time frame.
WEC Energy received regulatory approval for two Liquefied Natural Gas (LNG) facilities to address the demand for additional natural gas supply in Wisconsin. The commercial operation of LNG facilities is expected to be in service by late 2023 or early 2024. The total expected investments in the project were $370 million. These LNG facilities will provide solution to Southeastern Wisconsin to meet peak customer demands during the coldest days of the year.
All the factors stated above clearly indicate that the company has enough financial strength to move forward with a shareholder-friendly strategy over the long term.
In the past three months, WEC Energy’s shares have gained 5.9% compared with the industry’s growth of 10%.
Image Source: Zacks Investment Research
Zacks Rank and A Stock to Consider
WEC Energy currently carries a Zacks Rank #4 (Sell). A top-ranked stock in the same industry worth considering is NRG Energy NRG, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NRG Energy’s current dividend yield is 4.43%. The Zacks Consensus Estimate for 2022 reflects year-over-year growth of 44.98%.