The board of directors of ITC Holdings Corp. has approved an almost 15% hike in its quarterly dividend rate. The revised dividend of 21.55 cents per share will be distributed on Sep 15, 2016 to shareholders of record as of the close of business on Sep 1.
The recently approved hike marks an increase of 2.8 cents from the last dividend rate of 18.75 cents per share and is in sync with management’s long-term dividend policy. The new annualized dividend amounts to 86.2 cents per share, up from 75 cents paid earlier, resulting in a dividend yield of 1.8%.
ITC Holdings’ management has consistently increased its dividend payout over the last11 years.
Pending Acquisition by Fortis
The Oklahoma Corporation Commission has given the final nod to Canadian utility major, Fortis Inc.’s proposed takeover of ITC Holdings. The deal was valued at nearly $11.3 billion as of Feb 8, 2016, when the acquisition was announced.
Under the deal, which is expected to close by late 2016, shareholders of ITC Holdings are entitled to $22.57 in cash and 0.7520 of a Fortis common share for each ITC common share.
The acquisition will enable ITC Holdings to achieve its long-term strategy of upgrading transmission facilities to enhance reliability, expand its reach into untapped energy markets and lowering the cost of electricity distribution.
Sector Overview
The utility sector is considered a defensive play or safe haven during turbulent market conditions. Geopolitical turmoil and higher volatility were haunting the markets from the beginning of the year. Britain’s decision to leave the EU added to the uncertainty, driving yields on government bonds to record lows.
Further, the Federal Reserve’s stance to hike interest rates remains dovish. In such a scenario, utility companies made the biggest gains as low interest rates and bond yields make their high dividend payments more appealing. Additionally, utility stocks offer excellent capital appreciation over the longer term.
The utilities sector reported year-over-year earnings growth of 8.3% as against the S&P 500’s 3.3%decline in the second quarter of 2016.
Zacks Rank & Key Picks
ITC Holdings carries a Zacks Rank #2 (Buy). Other favorably placed stocks in the utility space include Power Corp. (KEP - Free Report) , Spark Energy, Inc. and DTE Energy Company (DTE - Free Report) . Both Korea Electric and Spark Energy sport a Zacks Rank #1 (Strong Buy), while DTE Energy carries the same rank as ITC Holdings.
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The board of directors of ITC Holdings Corp. has approved an almost 15% hike in its quarterly dividend rate. The revised dividend of 21.55 cents per share will be distributed on Sep 15, 2016 to shareholders of record as of the close of business on Sep 1.
The recently approved hike marks an increase of 2.8 cents from the last dividend rate of 18.75 cents per share and is in sync with management’s long-term dividend policy. The new annualized dividend amounts to 86.2 cents per share, up from 75 cents paid earlier, resulting in a dividend yield of 1.8%.
ITC Holdings’ management has consistently increased its dividend payout over the last11 years.
Pending Acquisition by Fortis
The Oklahoma Corporation Commission has given the final nod to Canadian utility major, Fortis Inc.’s proposed takeover of ITC Holdings. The deal was valued at nearly $11.3 billion as of Feb 8, 2016, when the acquisition was announced.
Under the deal, which is expected to close by late 2016, shareholders of ITC Holdings are entitled to $22.57 in cash and 0.7520 of a Fortis common share for each ITC common share.
The acquisition will enable ITC Holdings to achieve its long-term strategy of upgrading transmission facilities to enhance reliability, expand its reach into untapped energy markets and lowering the cost of electricity distribution.
Sector Overview
The utility sector is considered a defensive play or safe haven during turbulent market conditions. Geopolitical turmoil and higher volatility were haunting the markets from the beginning of the year. Britain’s decision to leave the EU added to the uncertainty, driving yields on government bonds to record lows.
Further, the Federal Reserve’s stance to hike interest rates remains dovish. In such a scenario, utility companies made the biggest gains as low interest rates and bond yields make their high dividend payments more appealing. Additionally, utility stocks offer excellent capital appreciation over the longer term.
The utilities sector reported year-over-year earnings growth of 8.3% as against the S&P 500’s 3.3%decline in the second quarter of 2016.
Zacks Rank & Key Picks
ITC Holdings carries a Zacks Rank #2 (Buy). Other favorably placed stocks in the utility space include Power Corp. (KEP - Free Report) , Spark Energy, Inc. and DTE Energy Company (DTE - Free Report) . Both Korea Electric and Spark Energy sport a Zacks Rank #1 (Strong Buy), while DTE Energy carries the same rank as ITC Holdings.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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