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OGE Energy Ups Dividend by 10%; Shares Rise Marginally

KEP DTE OGE SPKE

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In a bid to reward its valuable investors, OGE Energy Corp. (OGE - Free Report) has declared a handsome hike in its quarterly dividend. In the fourth quarter of 2016, the company will pay a dividend of $0.3025 per share, up 10% from the previous dividend of $0.275.

This makes the company’s annualized dividend worth $1.21 and the consequent dividend yield comes to 3.49%. Notably, OGE Energy has been paying dividends for past 69 years in a row, and never once did the company reduce its dividend rate.

Interestingly this dividend hike is in sync with the company’s commitment to grow its dividend each year by 10%, through 2019. Management will pay the surged dividend to its shareholders, of record as of Oct 11, 2016, on Oct 28, 2016.

Surely this came in as a boost for investors, as is evident from the 0.7% rise observed in OGE Energy's share price, following the release of the news.

Our View

Being the largest electric utility in Oklahoma, OGE Energy is currently pursuing an aggressive energy efficiency program, on account of which management plans to spend a total of around $2.8 billion during 2016-2020. The company also plans to invest approximately $800 million between 2016 and 2019 in environmental compliance and plant modernization projects. No doubt these initiatives, along with the recent dividend hike news, are indicative of the strong capital structure the company currently bears.

In this context, we remind investors that OGE Energy had awarded $120 million to its stockholders in 2015, in the form of dividends. With the company continuing to hike its dividend growth annually by 10%, as promised by its authority, we expect to witness a handsome improvement in this award in 2016 and beyond.

Considering the strong financial position OGE Energy currently holds, and the several strategic initiatives that it has been contemplating lately, we expect to witness similar dividend hike episodes on the company’s part going forward.

Stocks to Consider

A few prominent stocks in the utility-electric power industry include Korea Electric Power Corp. (KEP - Free Report) , Spark Energy, Inc. (SPKE - Free Report) and DTE Energy Company (DTE - Free Report) .

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