CMS Energy Corporation (CMS - Free Report) recently announced that its board of directors has approved a 7% quarterly dividend hike on its common stock to 38.25 cents per share. Post issuance of the new rate, the annualized dividend will be $1.53. The raised dividend is payable Feb 28, 2019, to its shareholders of record as of Feb 1, 2019.
Notably, this dividend hike came in line with the company’s long-term dividend growth expectations of 6-8%.
The current dividend yield of the company is 3.03%, higher than the Zacks Composite S&P 500’s yield of 2.01%.
Factors Supporting Dividend Hikes
A favorable financial position enables CMS Energy to pay scrumptious dividends and increase its dividend payouts at regular intervals apart from investing in infrastructure projects. As of Sep 30, 2018, the company’s cash and cash equivalents totaled $323 million, up from $182 million at 2017-end.
Moreover, in third-quarter 2018, the company generated cash from operating activities of $1,565 million compared with the year-ago quarter’s figure of $1,199 million.
Dividend Trends Among Utilities
The utility sector is a fundamentally strong as demand for utility services is generally immune to fluctuations of the economic cycle, especially as the companies provide basic services like electricity, gas and water that are always in demand. This makes the utilities safe-haven stocks and they enjoy a steady flow of revenues and cash flows.
As a result of steady flow of uninterrupted income in general, these stocks tend to generate consistent profits and reward it shareholders with high dividends and CMS Energy is no exception. In this regard, it is imperative to mention that AES Corp.’s (AES - Free Report) management approved a 3.8% quarterly cash dividend increase on its common stock of 47.5 cents per share in December 2018. In the prior month, Atmos Energy Corporation (ATO - Free Report) announced a hike in the company’s quarterly dividend to 52.5 cents per share. Ameren Corporation (AEE - Free Report) too approved a 3.8% quarterly cash dividend raise on its common stock of 47.5 cents per share in October 2018.
In the past 12 months, shares of CMS Energy have surged 19.3% compared with the industry’s rise of 8.3%.
CMS Energy currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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