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California Water Service (CWT) Board Hikes Dividend by 4%
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California Water Service Group (CWT - Free Report) announced that its board of directors has approved an increase in the quarterly dividend rate. The company's 312th consecutive quarterly dividend of 26 cents per share reflects a 4% increase from 25 cents per share. The new dividend will be paid out on Feb 17, 2023 to stockholders of record on Feb 6, 2023.
The increase in dividend results in an annualized dividend of $1.04 per share from $1.00. The current dividend yield is 1.68%, better than the Zacks S&P 500 composite's average of 1.53%.
Can California Water Service Sustain Dividend Hikes?
California Water Service’s primary focus is on expanding operations in western United States and exploring new opportunities to further spread its regulated and non-regulated water and wastewater activities. The company completed acquisitions and other organic efforts on the back of improving economic conditions and its customer base is likely to continue witnessing this uptrend in 2023.
The utility invested $293.2 million and $298.7 million in 2021 and 2020, respectively. California Water Service’s estimated capital expenditure for 2023 and 2024 is $360 million and $365 million, respectively. The majority of its capital expenditures was associated with mains and water treatment equipment. These investments will allow the company to serve an expanded customer base, which will result in better revenues and free cash flows.
These positive developments indicate that management will be able to sustain the shareholder-friendly initiatives in future as well.
Utilities’ Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends. Utilities are often considered as bonds substitute due to its ability to distribute dividend on a regular basis.
Recently, ONE Gas (OGS - Free Report) and WEC Energy Group (WEC - Free Report) increased their quarterly dividend rate by 4.8% and 7.2%, respectively.
The Zacks Consensus Estimate for ONE Gas’ fourth-quarter earnings is pegged at $1.20 per share, implying a year-over-year increase of 7.14%. Its current dividend yield is 3.2%.
The Zacks Consensus Estimate for WEC Energy Group’s fourth-quarter earnings is pegged at 75 cents per share, implying a year-over-year increase of 5.7%. Its current dividend yield is 3.4%.
Price Performance
In the past month, the California Water Service Group stock has returned 2.2%, outperforming the industry average of 1.2%.
Image Source: Zacks Investment Research
Zacks Rank & Stock to Consider
California Water Service Group currently has a Zacks Rank #4 (Sell).
A better-ranked stock in the utilities sector is NRG Energy (NRG - Free Report) , currently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for NRG Energy’s fourth-quarter earnings is pegged at $1.43 per share, implying a year-over-year increase of 247.4%. Its current dividend yield is 4.5%.
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California Water Service (CWT) Board Hikes Dividend by 4%
California Water Service Group (CWT - Free Report) announced that its board of directors has approved an increase in the quarterly dividend rate. The company's 312th consecutive quarterly dividend of 26 cents per share reflects a 4% increase from 25 cents per share. The new dividend will be paid out on Feb 17, 2023 to stockholders of record on Feb 6, 2023.
The increase in dividend results in an annualized dividend of $1.04 per share from $1.00. The current dividend yield is 1.68%, better than the Zacks S&P 500 composite's average of 1.53%.
Can California Water Service Sustain Dividend Hikes?
California Water Service’s primary focus is on expanding operations in western United States and exploring new opportunities to further spread its regulated and non-regulated water and wastewater activities. The company completed acquisitions and other organic efforts on the back of improving economic conditions and its customer base is likely to continue witnessing this uptrend in 2023.
The utility invested $293.2 million and $298.7 million in 2021 and 2020, respectively. California Water Service’s estimated capital expenditure for 2023 and 2024 is $360 million and $365 million, respectively. The majority of its capital expenditures was associated with mains and water treatment equipment. These investments will allow the company to serve an expanded customer base, which will result in better revenues and free cash flows.
These positive developments indicate that management will be able to sustain the shareholder-friendly initiatives in future as well.
Utilities’ Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends. Utilities are often considered as bonds substitute due to its ability to distribute dividend on a regular basis.
Recently, ONE Gas (OGS - Free Report) and WEC Energy Group (WEC - Free Report) increased their quarterly dividend rate by 4.8% and 7.2%, respectively.
The Zacks Consensus Estimate for ONE Gas’ fourth-quarter earnings is pegged at $1.20 per share, implying a year-over-year increase of 7.14%. Its current dividend yield is 3.2%.
The Zacks Consensus Estimate for WEC Energy Group’s fourth-quarter earnings is pegged at 75 cents per share, implying a year-over-year increase of 5.7%. Its current dividend yield is 3.4%.
Price Performance
In the past month, the California Water Service Group stock has returned 2.2%, outperforming the industry average of 1.2%.
Image Source: Zacks Investment Research
Zacks Rank & Stock to Consider
California Water Service Group currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock in the utilities sector is NRG Energy (NRG - Free Report) , currently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for NRG Energy’s fourth-quarter earnings is pegged at $1.43 per share, implying a year-over-year increase of 247.4%. Its current dividend yield is 4.5%.