Back to top

Image: Bigstock

WEC Energy (WEC) to Reward Shareholders Via 7.4% Dividend Hike

Read MoreHide Full Article

The board of directors of WEC Energy Group (WEC - Free Report) is planning to raise the first-quarter 2022 dividend to 72.75 cents per share, marking a hike of 7.4% and totaling the annual figure to $2.91 per share from $2.71. This is in line with its targeted payout ratio of 65-70% of earnings.

The new dividend will be declared in the scheduled meeting in January and will be payable Mar 1, 2022, to WEC Energy’s stockholders of record on Feb 14, 2022. If approved, the new dividend yield will be 3.27% compared with the S&P 500 composite’s 1.41% average.

Concurrent to the dividend hike, WEC initiated the 2022 earnings guidance in the range of $4.29-$4.33 per share. The midpoint of the range, $4.31 per share, indicates growth of 7.5% from the midpoint of WEC Energy’s initial guidance for 2021. Also, it is marginally higher than the Zacks Consensus Estimate of $4.29.

Can This Dividend be Sustained?

WEC Energy consistently hiked dividends for the last 12 years.WEC plans to grow dividends in the band of 6-7% annually, subject to approvals of the board of directors.

WEC’s net cash provided by operating activities in the first nine months of 2021 was $2,006.7 million compared with $1,949.7 million in the comparable period of 2020.This outperformance was led by higher revenues owing to operational efficiency and the reopening of economic activities.

WEC Energy is making efforts to grow both organically and inorganically, which are boosting its performance as well as cash flow. At the third-quarter end, WEC had an additional 8,000 electric and 15,000 natural gas customers from the respective year-ago quarter’s reported figures.

WEC continues to invest in cost-effective zero-carbon generation and plans to spend $17.7 billion in the 2022-2026 time frame.This systematic investment to strengthen operations and rate revision will provide enough funds to sustain its dividend payment routine.

Dividend Hikes in Utility Space

Along with WEC Energy, other electric utilities are also boosting shareholder value via dividends. These include NRG Energy (NRG - Free Report) , PPL Corp. (PPL - Free Report) and Duke Energy (DUK - Free Report) , all carrying a Zacks Rank#3 (Hold) at present.

In November 2021, NRG Energy increased its 2022 annual dividend by 8% from $1.30 per share to $1.40. NRG targets an annual dividend growth rate of 7-9% over the long term, subject to the board of directors’ approval. NRG has a current dividend yield of 3.65%.

PPL Corp.’s strong cash flow generation capacity enables it to pay consistent dividends to its shareholders. Currently, PPL expects the dividend payout ratio in the range of 60-65%. PPL’s current dividend yield is 5.95%.

Duke Energy’s dividend payment history indicates that it has been performing steadily and generating enough cash flow for a while to distribute dividends to its shareholders. DUK paid out a dividend of $2.34 billion in the first nine months of 2021 compared with $2.11 billion in the same period last year and has a dividend yield of 4.08% at present.

The Zacks Consensus Estimate for 2022 earnings of NRG, PPL and DUK is pegged at $5.91, $1.53 and $5.47, respectively, marking an improvement of 3.3%, 30.5% and 4.8% each from the corresponding year-ago actuals.

Zacks Rank & Price Performance

In the past month, shares of this currently Zacks #3 Ranked WEC Energy have lost 0.9% compared with the industry’s fall of 1.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

One Months’ Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Published in