Saturday, December 17, 2011

Electric Utility Dividend Increasers

Some of the electric utilities have been declaring dividend increases this month. A couple examples are Oklahoma City based OGE Energy Corp. (OGE) boosted its annual dividend by 4.7% and Edison International (EIX), which serves southern California, recently bumped up its quarterly dividend by 1.56%

OGE provides electrical generation to Oklahoma and western Arkansas. It also owns over 5,900 miles of intrastate natural gas gathering pipelines. The stock trades at 16 times current earnings and 15 times future earnings, and provides a yield of 3.0% based on its increased payout. Earnings for the latest quarter were up 9.6% on a 7.7% increase in revenues. The company is currently subject to a proposed rate increase hearing by the Oklahoma Corporation Commission's Public Utility Division. The company is asking to raise its rates by about $73 million.

Edison International has a price to earnings ratio of 13 and a forward PE of 15. Based in the dividend increase, the stock yields 3.3%. Revenues grew by 5.1% for the latest quarter, however earnings dropped 16.5%. In September of this year, FBR Capital initiated coverage of the company giving it and Outperform rating and Wunderlich upgraded the stock from a Hold to a Buy. This Rosemead, California company has 700 distribution substations located throughout California. It has four wind projects under construction totaling 480 megawatts of net generating capacity.

Top features of electric utilities include the fact that they can generally provide relative security, safety, and stability compared to stocks in many other sectors, due to the payment of fairly high dividends. just updated its free list of electric utility stocks and there are more than 20 with yields greater than 3%.

Disclosure: Author did not not own any of the above at the time the article was written.


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