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CenterPoint Energy (CNP) Declares 4% Increase in Dividend

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Houston, TX-based CenterPoint Energy Inc. CNP continues to maximize shareholders’ wealth through the payment of steady and incremental dividends. The company’s board of directors once again declared a 4% increase in its quarterly cash dividend rate.

Dividend Hike

CenterPoint will reward shareholders with a dividend of 26.75 cents per share, compared with 25.75 cents paid earlier. The revised dividend will be paid on Mar 10, 2016 to shareholders of record as of Feb 16.

On an annualized basis, CenterPoint’s dividend rate will come to $1.07 per share. The company’s current annual dividend yield is 4.3% based on the closing share price of $24.81 on Jan 5, 2017, significantly higher than the sector average of 3.6%.

Financials

CenterPoint judiciously utilizes funds for growth projects while preserving a stable financial position. As of Sep 30, 2016, CenterPoint Energy had cash and cash equivalents of $270 million, up from $264 million as of Dec 31, 2015. Total long-term debt was $7,736 million as of Sep 30, 2016, down from $7,866 million as of Dec 31, 2015.

A favorable financial position supports CenterPoint’s practice of paying regular dividends. In the first nine months of 2016, the company paid $332 million as dividends to its shareholders, up from $319 million paid a year ago. The latest dividend hike marks the 12th in a row in as many years.

CenterPoint Energy’s Plans

CenterPoint Energy is focused on strengthening its infrastructure through regular capital investment, which will help it to meet the requirements of an expanding customer base. The company is currently focused on upgrading infrastructure and improving reliability. CenterPoint Energy’s capital expenditure in the first nine months of 2016 was $1,047 million. The company has set a capital outlay target of $6.2 billion from 2016 through 2020, including an investment of $1.4 billion in 2016. The company is targeting 4–6% annual EPS growth through 2018, inclusive of Midstream Investments.

Price Movement

Shares of CenterPoint Energy have gained 39.0% in the last 12 months, outperforming the Zacks categorized Utility- Electric Power industry’s gain of 6.8%.



Steady growth in the customer count has mainly driven CenterPoint Energy’s performance over the last several quarters. In the third quarter of 2016, the company added 51,208 meter customers under its Electric Transmission & Distribution segment. This represents an annual growth rate of 2.2%. Also, CenterPoint added 34,844 users at the Gas Utility business during this period. Ongoing economic development in CenterPoint’s operating territories primarily boosted the customer base. The trend is expected to continue in the future given the economic recovery in Houston, which will subsequently boost utility demand.

Zacks Rank & Other Key Picks

CenterPoint Energy currently has a Zacks Rank #2 (Buy). A couple of other favorably placed stocks in the same space include Ameren Corporation AEE, Hawaiian Electric Industries, Inc. HE and Consolidated Edison, Inc. (ED - Free Report) . All the companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren’s 2017 estimates improved 0.4% to $2.77 from $2.76 over the last 60 days. Shares of the company gained 20.3% in the last 12 months, outperforming the broader industry.

Hawaiian Electric’s 2017 estimates inched up 0.6% to $1.80 from $1.79 over the last 30 days. Its shares gained 13.6% in the last 12 months, outperforming the broader industry.

Consolidated Edison’s 2017 estimates inched up 0.5% to $4.17 from $4.15 over the last 90 days. Its shares gained 13.0% in the last 12 months, outperforming the broader industry.

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