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IDACORP (IDA) Offers Dividend Hike: Time to Buy the Stock?

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The board of directors of IDACORP, Inc. (IDA - Free Report) has approved a 7.8% increase in its quarterly dividend rate.

The latest hike marks an increase of 4 cents from the last quarterly dividend rate of 51 cents per share and it reflects management's confidence in the company’s long-term financial strength and performance. The new annualized dividend amounts to $2.20 per share, up from $2.04 paid earlier, resulting in a dividend yield of 2.9%.

IDACORP's management has been raising the dividend payout since the last five years, having increased the amount by a cumulative 83% so far.

Long-Term Dividend Goals

IDACORP affirmed that its long term goal of between 50 and 60% of sustainable earnings will be maintained on the support of the midpoint of projected 2016 annual earnings.

With no near-term debt, management plans to offer annual dividend hikes of 5% until it touches the high end of its payout target.

What’s Ahead?

IDACORP benefits from improving economic fundamentals in Idaho. The unemployment rate in the state has stayed well below the country average and the company has seen healthy growth in demand in its service territories. IDACORP’s regulated electric operations in Idaho generate a relatively stable and growing earnings stream, which will help the company to continue with dividend payment.

IDACORP is making consistent investments to improve its generation, transmission and distribution facilities. The utility has an investment plan of nearly $1.4- $1.5 billion over 2016–2020 in different projects. These investments will help IDACORP to provide efficient services to its expanding customer base. We expect these investments to increase the reliability of its services and enable it to retain existing consumers and attract new ones.

Dividend Hike by Another Utility

The board of directors of New Jersey Resources Corp. (NJR - Free Report) has also approved a 6.3% increase in its quarterly dividend rate. The revised dividend of 25.5 cents per share will be distributed on Oct 3, 2016 to shareholders of record at the close of business on Sep 23.

The latest hike marks an increase of 1.5 cents from the prior payout of 24 cents per share and it reflects management's confidence in the company’s financial profile and performance. The new annualized dividend amounts to $1.02 per share, up from 96 cents paid earlier, resulting in a dividend yield of 3.10%.

Zacks Rank & Stocks to Consider

IDACORP carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space include Spark Energy, Inc. (SPKE - Free Report) with a Zacks Rank #1 (Strong Buy) and ITC Holdings Corp. , carrying a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

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