WEC Energy Group, Inc.’s (WEC - Free Report) board of directors is planning for a quarterly dividend hike on the company's common stock to 59 cents per share from the first quarter of 2019. This will result in an annualized dividend of $2.36.
Details of the Dividend Hike
The revised quarterly dividend will be payable on Mar 1, 2019 to shareholders of record as of Feb 14, 2019. The company intends to distribute 65-75% of its earnings as dividends. The company’s long-term objective is to boost earnings per share at an average annual rate of 5-7%.
The current annualized dividend yield of the company is 3.2% higher than the industry’s 2.93% and Zacks S&P 500 composite’s 1.95%. Increase in distributable income reflects the company’s strong balance sheet and cash flow position. Notably, the company’s cash flow for operating activities increased 15% in the third quarter on a year-over-year basis.
What Led to the Dividend Hike?
WEC Energy delivered strong results and surpassed earnings guidance in the past 14 years. Efficient management, proper execution of plans and improving economic condition
resulted in higher demand from residential as well as industrial and commercial customers.
WEC Energy is working on the Modernization and Reliability Project that includes modernization of the electric distribution system and burying or upgrading lines. The project has two phases that are expected to be complete by 2021. The company will make an investment of $250 million between 2018 and 2021.
The company is also working to upgrade and strengthen its natural gas distribution system by replacing 2,000 miles of pipes. It also focusing on Advanced Metering Infrastructure (AMI) Program in four states it serves. Total capital contributions to ATC will be approximately $155 million from 2018 through 2020. WEC Energy is also focused on lowering carbon emissions by approximately 40% from 2005 levels by 2030 and 80% by 2050. The company projects total capital expenditure to be nearly $14.1 billion in the 2019-2023 period.
Other Utilities Paying Dividend
Payment of dividend is a regular feature for companies under the Utility sector. Notably, other utilities have raised dividend rates during the second half of 2018. Duke Energy Corporation (DUK - Free Report) hiked quarterly rate by 4.2%, while Ameren Corporation (AEE - Free Report) and American Electric Power Company, Inc (AEP - Free Report) raised quarterly dividend rates by 8.1% and 3.8%, respectively.
Zacks Rank & Price Movement
WEC Energy currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
WEC Energy’ shares have moved up 7.0% in the past month, against the industry’s decline of 1.0%.
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