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NiSource (NI) Rewards Shareholders With 11.4% Dividend Hike

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NiSource Inc. (NI - Free Report) announced that it has increased the quarterly common dividend payment by 11.4% to 19.5 cents per share. The increased dividend is payable Feb 20, 2018 to shareholders of record as of Feb 9, 2018.

The increase in dividend marks a hike from prior dividend of 17.5 cents per share, which was announced in January 2017. The company’s new annualized. The current dividend yield of the company is 3.22% based on yesterday’s close price of $24.22. The yield is marginally lower than the industry yield of 3.25%.

What is Driving NiSource?

The biggest driver of the company’s financial performance continues to be its long-term infrastructure modernization investments.NiSource intends to invest nearly $1.6-$1.8 billion annually in planned utility infrastructures from 2019 to 2020. It has also identified long-term infrastructure investments worth $30 billion with more than 90% of it allocated to regulated pipes and wires.

NiSource has a 100% regulated utility business model. With robust investment plans, the company is expecting to deliver targeted earnings and dividend growth of 5-7% annually through 2020.

Going Ahead

Going ahead, NiSource’s two major electric transmission projects that are on schedule are expected to come online by mid 2018. The 100 mile 345 KV and 65 mile 765 KV projects are designed to enhance reliability in performance.

NiSource's long-term utility infrastructure modernization programs are anticipated to create value for customers and communities.

Utilities Continues to Pay Dividend

The demand for utility services is generally immune to fluctuations of the economic cycle especially as these provide basic services like gas, electricity, and water. Consequently, the stocks in this space serve as safe-havens and enjoy a steady flow of revenues and cash flows.

In addition, the regulated nature of operation allows these stocks to generate consistent income and reward shareholders with high dividends and NiSource is no exception. In line with this another utility, ONEOK, Inc. (OKE - Free Report) , announced a hike of 3.3% in its quarterly dividend to 77 cents per share from the prior-quarterly dividend of 74.5 cents in January 2018.

Price Movement

In the last one year, shares of NiSource have gained 14.1%, outperforming the industry’s rally of 8.5%.

Zacks Rank & Key Picks

NiSource carries a Zacks Rank #3 (Hold). Investors can consider better-ranked stocks in the Utility space like Exelon Corporation (EXC - Free Report) and CenterPoint Energy, Inc. (CNP - Free Report) that carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exelon delivered an average surprise of 1.76% in the trailing four quarters. Its 2018 estimates have risen by 2.1% to $2.91 per share in the last 30 days.

CenterPoint delivered an average surprise of 6.42% in the trailing four quarters. Its 2018 estimates have risen by 4.3% to $1.47 per share in the last 30 days.

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