NiSource Inc.’s (NI - Analyst Report) board of directors approved a 4.2% hike in its quarterly dividend rate to 25 cents per share from the prior payout of 24 cents per share. The dividend will be paid on Aug 20, 2013 to shareholders of record as of Jul 31, 2013. This will bring the new annualized dividend to $1.00 per share from 96 cents earlier.
In 2012, NiSource had announced a target to increase the dividend annually in a band of 3% to 5%. The utility major said it intended to return 60%-70% of net adjusted earnings as dividends to its shareholders.
NiSource’s prior quarterly dividend increase of 4.3% was announced in May 2012. The company has been paying healthy dividends since 1999. The recent acceleration confirms the company’s commitment towards boosting shareholder value.
NiSource’s confidence reflects its lofty long-term projects worth $30 billion and infrastructure-expansion steps that will ensure earnings growth in the range of 5% to 7%. This will be further reinforced by the company’s favorable investment-grade credit ratings.
The company continues to maintain a strong cash balance and the hike will require an extra payment of $3.1 million. At the end of Mar 31, 2013, the company’s cash balance shot up a whopping 179.3% to $101.4 million from $36.3 million at the end of Dec 31, 2012. Also, the company’s robust liquidity position will enable it to pay the extra amount with ease.
NiSource’s current annual dividend yield of 3.4% is substantially higher than the industry average yield. This will certainly make the stock look attractive and capture investor attention. Currently the company carries a Zacks Rank #3 (Hold).
Other utility majors that have recently upped their dividend payment include DTE Energy Holding Company (DTE - Analyst Report), Spectra Energy Corporation (SE - Analyst Report) and Duke Energy Corporation (DUK - Analyst Report).
Based in Merrillville, Ind., NiSource together with its subsidiaries provides natural gas, electricity, and other products and services in territories of Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana, and Massachusetts.