Exelon is engaged in energy generation and delivery, operating 19,000 megawatts of nuclear energy capacity in the United States and a total of 35,000 megawatts. The company currently pays a quarterly dividend of $0.525 but has recently announced a 41% cut beginning in the second quarter of this year. Based on the old dividend the yield sat at 6.3%, but with the cut the yield has dropped to about 3.7%.
Can the company support this new, lower dividend or is another cut imminent? 2012 was a particularly bad year in terms of both net income and free cash flow. Net income fell to $1.16 billion, down from $2.495 billion in 2011 and the lowest value since 2005. Free cash flow plummeted to just $321 million. Using the new dividend this puts the payout ratio with respect to net income at 87% and well over 100% with respect to free cash flow.
Now, 2012 may be an anomaly and profits may rise back to previous levels. But if this takes a few years then the new dividend may need to be cut again. Exelon has a tremendous amount of debt, over $19 billion, and significant pension liabilities as well. The company paid nearly $1 billion in interest in 2012, and this number has risen from $832 million in 2008. There's far too much uncertainty going forward to consider this company, especially considering the dividend yield after the cut takes effect isn't even all that high. I'd avoid this one until profitability improves and the dividend is better supported.
Mondays and Tuesdays are peak times for job hunting.
The smooth sailing for ALU is over and it is time to get ready for some rally rough times and intense competition.
Alcatel-Lucent desperately needs to cut costs and increase revenue. The company cannot carry on in the current condition for long. I believe Combes has the ability to successfully carry out his strategies if given time and proper support. The competition is intense in the market; however, due to increasing demand for data services and networking equipment, there is also attractive opportunity available. Alcatel-Lucent shareholders will have to be patient and see what the new leadership has in mind. If Combes is able to present a clear plan and implements it successfully; Alcatel-Lucent might reach its previous heights.
Western Canada is producing more crude oil than it knows what to do with. So guess where Eastern Canada is going to get crude oil from this summer? By ship from Texas.
The Obama administrations wants to keep shipping oil on Warren Buffett's rail road.
Governors in Michigan, Pennsylvania, Maryland and Vermont have proposed raising fuel taxes, and the New Hampshire legislature will hold a hearing on Thursday on a bill that would phase in a 15-cent-per-gallon increase.
Fannie Mae says it felt so good the first time, they say lets do it again....
Illinois neither admitted nor denied the charges and was not ordered to pay a penalty. It agreed to change its practices to more fully disclose risks to bond investors, the SEC said Monday.
Just another whole group getting away with fraud and paying off the SEC so they do not go to jail. TOO BIG TO JAIL.
Illinois, which has the worst-funded state pension system in the United States, agreed on Monday to settle federal civil securities fraud charges alleging it repeatedly misled municipal bond investors about the underfunding of its pensions,
Fidelity Investments, the largest U.S. provider of workplace retirement plans, is facing more accusations that it improperly uses customer money earned in overnight accounts to pay its own operating expenses.
The $6.3 billion increase was almost entirely the result of a sudden spike in oil imports.
Will the Senate just put the bill on the huge stack of bills already gathering dust in the senate?