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DTE Energy (DTE) Completes the Spin-Off of DT Midstream
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DTE Energy Company (DTE - Free Report) has recently completed the spin-off of its non-utility natural gas pipeline, storage and gathering business, DT Midstream, Inc. Resultantly, DT Midstream is now an independent, publicly-traded company whose shares will begin trading on the New York Stock Exchange (NYSE) Jul 1 onward, under the symbol, DTM.
In connection with the spin-off, DTE Energy’s shareholders retained their current shares. Additionally, they received one share of DT Midstream common stock for every two shares of DTE common stock owned, as of the close of the business on Jun 18, 2021, the record date.
What Possibly Led to the Spin-Off?
Over the past few years, through a combination of greenfield development and strategic acquisitions, the company has been able to meaningfully increase Midstream’s scale, diversification and market reach. Notably, its Midstream operations have emerged as a strong operator in the midstream space with assets, resources and capabilities to stand on its own and have a separate identity altogether.
As a result, the decision to separate the Midstream operations from DTE Energy was made to sharpen both companies’ focus on their respective strategic priorities and stakeholder needs. DTE Energy and DT Midstream will be better positioned to grow, thrive and deliver superior returns.
How Will the Spin-Off Benefit DTE Energy?
The spin-off will pave way for a significant number of benefits for DTE Energy as a whole, going forward. Approximately 90% of the company’s operating earnings and investments will now be focused purely on utility operations compared with 70% earlier. Now, with the separation being completed, DTE Energy will continue to target a long-term operating EPS growth rate of 5-7% compared with its 2020 original guidance.
Furthermore, the company’s growth is supported by $17 billion of planned utility capital investments over the next five-year period, indicating a 13% increase over its prior plan. These investments are aligned with DTE Energy’s aggressive clean energy targets, including net-zero greenhouse gas emissions by 2050. Also, as a result of the spin-off, it will now be a predominantly pure-play electric and natural gas utility, with better earnings growth, a strong capital investment plan and a proven record of cost management.
Other Utilities Adopting Clean Energy Measures
Realizing the need and advantage of the rapid shift toward clean energy, utilities across the board have pledged for reducing fossil fuel dependence at a faster pace.
Following such a strategy, utilities such as Duke Energy (DUK - Free Report) aim to achieve significant carbon neutrality and reduce existing carbon emissions by at least 50% by 2030, and achieve net-zero carbon emissions by 2050. Another utility company, Xcel Energy (XEL - Free Report) , aims to achieve an 80% carbon reduction by 2030 and 100% carbon-free electricity by 2050. Likewise, American Electric Power (AEP - Free Report) aims at reducing carbon dioxide emissions by 80% by 2050.
In a year’s time, shares of the company have increased only 1.7% compared with the industry’s 9.8% growth.
Image Source: Zacks Investment Research
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DTE Energy (DTE) Completes the Spin-Off of DT Midstream
DTE Energy Company (DTE - Free Report) has recently completed the spin-off of its non-utility natural gas pipeline, storage and gathering business, DT Midstream, Inc. Resultantly, DT Midstream is now an independent, publicly-traded company whose shares will begin trading on the New York Stock Exchange (NYSE) Jul 1 onward, under the symbol, DTM.
In connection with the spin-off, DTE Energy’s shareholders retained their current shares. Additionally, they received one share of DT Midstream common stock for every two shares of DTE common stock owned, as of the close of the business on Jun 18, 2021, the record date.
What Possibly Led to the Spin-Off?
Over the past few years, through a combination of greenfield development and strategic acquisitions, the company has been able to meaningfully increase Midstream’s scale, diversification and market reach. Notably, its Midstream operations have emerged as a strong operator in the midstream space with assets, resources and capabilities to stand on its own and have a separate identity altogether.
As a result, the decision to separate the Midstream operations from DTE Energy was made to sharpen both companies’ focus on their respective strategic priorities and stakeholder needs. DTE Energy and DT Midstream will be better positioned to grow, thrive and deliver superior returns.
How Will the Spin-Off Benefit DTE Energy?
The spin-off will pave way for a significant number of benefits for DTE Energy as a whole, going forward. Approximately 90% of the company’s operating earnings and investments will now be focused purely on utility operations compared with 70% earlier. Now, with the separation being completed, DTE Energy will continue to target a long-term operating EPS growth rate of 5-7% compared with its 2020 original guidance.
Furthermore, the company’s growth is supported by $17 billion of planned utility capital investments over the next five-year period, indicating a 13% increase over its prior plan. These investments are aligned with DTE Energy’s aggressive clean energy targets, including net-zero greenhouse gas emissions by 2050. Also, as a result of the spin-off, it will now be a predominantly pure-play electric and natural gas utility, with better earnings growth, a strong capital investment plan and a proven record of cost management.
Other Utilities Adopting Clean Energy Measures
Realizing the need and advantage of the rapid shift toward clean energy, utilities across the board have pledged for reducing fossil fuel dependence at a faster pace.
Following such a strategy, utilities such as Duke Energy (DUK - Free Report) aim to achieve significant carbon neutrality and reduce existing carbon emissions by at least 50% by 2030, and achieve net-zero carbon emissions by 2050. Another utility company, Xcel Energy (XEL - Free Report) , aims to achieve an 80% carbon reduction by 2030 and 100% carbon-free electricity by 2050. Likewise, American Electric Power (AEP - Free Report) aims at reducing carbon dioxide emissions by 80% by 2050.
Zacks Rank & Price Movement
DTE Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In a year’s time, shares of the company have increased only 1.7% compared with the industry’s 9.8% growth.
Zacks' Top Picks to Cash-in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>