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FirstEnergy (FE) Rewards Shareholders With 6% Dividend Hike
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FirstEnergy Corporation (FE - Free Report) announced that its board of directors has approved a 6% increase in its quarterly dividend rate. The new dividend rate will be 42.5 cents per share compared with the previous quarter’s 41 cents, payable on Jun 1, 2024, to stockholders of record as of May 7, 2024.
This increase resulted in an annualized dividend of $1.70 per share compared with the prior level of $1.60 in 2023. FirstEnergy’s current dividend yield is 4.29%, higher than the Zacks S&P 500 Composite's average of 1.31%.
Can FirstEnergy Sustain Dividend Hikes?
FirstEnergy’s efforts to expand its regulated generation mix provided stability to its earnings. In the last few years, the company witnessed a successful broadening of regulated operations and a complete transition to become a fully regulated utility company.
FE’s investment will help it serve its 6 million customers more efficiently. In the past several years, Regulated Distribution has experienced rate-based growth through investments.
The company’s ‘Energize365’ is a multi-year grid evolution platform, focused on enhancing customer experience while maintaining its strong affordability position with rates at or below its in-state peers. With planned investments of $26 billion between 2024 and 2028, the company will install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.
Strengthening of the transmission and renewable generation assets will allow it to transmit electricity even during adverse weather conditions and provide emission-free electricity to customers. FirstEnergy expects its earnings per share to improve 6-8% annually in the long term.
FirstEnergy has the potential to expand and improve further, which suggests that management will have sufficient funds to continue its shareholder-friendly activities in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable earnings due to regulated nature of operations. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
In the past few months, Alliant Energy Corporation (LNT - Free Report) , WEC Energy Group (WEC - Free Report) and Global Water Resources (GWRS - Free Report) have raised their quarterly dividend rate by 6.1%, 7% and 1%, respectively.
The Zacks Consensus Estimate for Alliant Energy’s 2024 earnings is pegged at $3.08 per share, implying a year-over-year increase of 9.22%. WEC’s current dividend yield is 3.93%.
The Zacks Consensus Estimate for WEC Energy’s 2024 earnings is pegged at $4.88 per share, implying a year-over-year increase of 5.4%. WEC’s current dividend yield is 4.15%.
The Zacks Consensus Estimate for Global Water Resources’ 2024 earnings is pegged at 31 cents per share, implying a year-over-year increase of 19.2%. GWRS’ current dividend yield is 2.41%.
Price Performance
In the past three months, FirstEnergy’s shares have risen 5.6% against the industry’s decline of 3.1%.
Image: Bigstock
FirstEnergy (FE) Rewards Shareholders With 6% Dividend Hike
FirstEnergy Corporation (FE - Free Report) announced that its board of directors has approved a 6% increase in its quarterly dividend rate. The new dividend rate will be 42.5 cents per share compared with the previous quarter’s 41 cents, payable on Jun 1, 2024, to stockholders of record as of May 7, 2024.
This increase resulted in an annualized dividend of $1.70 per share compared with the prior level of $1.60 in 2023. FirstEnergy’s current dividend yield is 4.29%, higher than the Zacks S&P 500 Composite's average of 1.31%.
Can FirstEnergy Sustain Dividend Hikes?
FirstEnergy’s efforts to expand its regulated generation mix provided stability to its earnings. In the last few years, the company witnessed a successful broadening of regulated operations and a complete transition to become a fully regulated utility company.
FE’s investment will help it serve its 6 million customers more efficiently. In the past several years, Regulated Distribution has experienced rate-based growth through investments.
The company’s ‘Energize365’ is a multi-year grid evolution platform, focused on enhancing customer experience while maintaining its strong affordability position with rates at or below its in-state peers. With planned investments of $26 billion between 2024 and 2028, the company will install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.
Strengthening of the transmission and renewable generation assets will allow it to transmit electricity even during adverse weather conditions and provide emission-free electricity to customers. FirstEnergy expects its earnings per share to improve 6-8% annually in the long term.
FirstEnergy has the potential to expand and improve further, which suggests that management will have sufficient funds to continue its shareholder-friendly activities in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable earnings due to regulated nature of operations. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
In the past few months, Alliant Energy Corporation (LNT - Free Report) , WEC Energy Group (WEC - Free Report) and Global Water Resources (GWRS - Free Report) have raised their quarterly dividend rate by 6.1%, 7% and 1%, respectively.
The Zacks Consensus Estimate for Alliant Energy’s 2024 earnings is pegged at $3.08 per share, implying a year-over-year increase of 9.22%. WEC’s current dividend yield is 3.93%.
The Zacks Consensus Estimate for WEC Energy’s 2024 earnings is pegged at $4.88 per share, implying a year-over-year increase of 5.4%. WEC’s current dividend yield is 4.15%.
The Zacks Consensus Estimate for Global Water Resources’ 2024 earnings is pegged at 31 cents per share, implying a year-over-year increase of 19.2%. GWRS’ current dividend yield is 2.41%.
Price Performance
In the past three months, FirstEnergy’s shares have risen 5.6% against the industry’s decline of 3.1%.
Image Source: Zacks Investment Research
Zacks Rank
FirstEnergy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.