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The harsh winter on the East Coast may have frustrated New Englanders, but shareholders of Northeast Utilities (NU) aren't complaining. On May 5, NU reported better than expected first quarter results due in large part to much colder weather.

Earnings per share came at 69 cents, 10% above the Zacks Consensus Estimate, marking the company's third straight earnings beat.

The company has also been consistently raising its dividend - a dividend that currently yields a solid 3.1%. It is a Zacks #2 Rank (Buy) stock.

First Quarter Results

On May 5, Northeast Utilities reported first quarter earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6 cents, as the company benefited from much colder weather.

Operating revenues declined 8%, which was more than offset by a 9% decrease in operating expenses. Overall, operating income was up slightly year-over-year.

Meanwhile, cash flow from operations soared 65% over the same quarter in 2010.

Reaffirmed Guidance

Management reiterated its guidance of $2.25 to $2.40 per share in the first quarter press release. The Zacks Consensus Estimate is within this range at $2.31, representing 5% growth over 2010 EPS.

The 2012 consensus estimate is currently $2.46 per share, corresponding to 6% EPS growth. It is a Zacks #2 Rank (Buy) stock.

3.1% Dividend

Northeastern pays a dividend that yields an attractive 3.1%. The company has a solid history of consistently raising its dividend. Over the last 10 years, NU has raised its dividend at a compound annual growth rate of 10.6%.

The company most recently raised its dividend 7% to 27.5 cents per share.


Shares of NU are currently trading at 15.1x 12-month forward earnings, a slight premium to its 10-year median of 14.2x, but a significant discount to the industry average of 29.3x.

Northeast Utilities primarily operates through three wholly-owned subsidiaries: The Connecticut Light and Power Company, Public Service Company of New Hampshire, and Western Massachusetts Electric Company.

Read the November 17 article here.

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Todd Bunton is the Growth & Income Stock Strategist for

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