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IDACORP (IDA) Rewards Shareholders With 5.6% Dividend Hike

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IDACORP Inc. (IDA - Free Report) announced that the board of directors has approved a 5.6% increase in the quarterly dividend rate. The revised quarterly dividend will be 75 cents up from the previous quarterly rate of 71 cents. The company’s new annualized dividend rate is $3 and the current dividend yield is 2.9%, better than the Zacks S&P 500 composite’s 1.4%.

IDACORP’s management has been annually raising the dividend rate and it belongs to an exclusive group of companies that have raised the dividend rate every year over the last decade. The board of directors approved a dividend increase this month, leading to a 150% total increase in annualized dividend over the aforesaid period.

For the long term, the company’s management aims at upwardly revising the dividend rate by 5% or more. This would keep IDACORP near the upper end of the current target payout ratio between 60% and 70%.

Can IDACORP Sustain Dividend Hikes?

IDACORP’s regulated electric operations in Idaho generate a relatively stable earnings stream. Ongoing economic improvements in its service territories have helped the company in expanding the customer base. These factors are positively impacting its operating income.

It projects capital expenditure to be $2 billion in the 2021-2025 time period. Owing to systematic investments for strengthening the generation portfolio, Idaho Power Hydroelectric Generation will be able to cater to the rising demand of the expanding customer base.

The company has undertaken initiatives to enhance financial strength and improve the core business. An ongoing increase in the customer base results in an improvement in operating income and its steady performance paves the way for further increase in the annual dividend rate.

Price Movement

In the past 12 months, IDACORP’s shares have outperformed the industry it belongs to.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Key Picks

IDACORP currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Exelon Corporation (EXC - Free Report) , Otter Tail Corporation (OTTR - Free Report) and Black Hills Corporation (BKH - Free Report) . While Exelon and Otter Tail sport a Zacks Rank #1 (Strong Buy), Black Hills has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exelon, Otter Tail, and Black Hills have a long-term (three to five years) earnings growth rate of 2.99%, 4.7%, and 5.09%, respectively.

The Zacks Consensus Estimate for 2021 earnings for Exelon and Otter Tail has increased 1.07% and 39.2%, respectively, in the past 60 days. Black Hills delivered an average surprise of 5.65% in the last four quarters. Its Zacks Consensus Estimate for 2021 earnings has been unchanged in the past 60 days.