DTE Energy Increases Quarterly Dividend Payout by 5.8% - Analyst Blog
DTE Energy Company’s DTE board of directors has approved a 5.8% increase in its quarterly dividend rate. The revised dividend of 73 cents per share will be distributed on Oct 15, 2015, to shareholders of record at the close of business on Sep 21, 2015.
The new annualized dividend of $2.92 per share reflects a dividend yield of 3.95%. DTE Energy’s management has been persistently raising the company’s dividend for the last six years with an average annual increase of 5.5%, which is in line with its long-term earnings expectations.
The regular dividend hikes reflect the company’s solid business strategy while ensuring consistent earnings. The company’s effort to maximize shareholder value is expected to attract investor attention.
DTE Energy is focused on improving its cost structure and directing capital investments toward renewable generation, utility infrastructure and environmental compliance assets. Focus on cost structure and operational improvements will help the entity to attain its long-term EPS growth target of 5–6%.
DTE Energy maintains a stable liquidity position and cash generating capacity. As of Mar 31, 2015, the company had available liquidity of around $1.9 billion, consisting of cash and funds available under unsecured revolving credit agreements. In the first quarter of 2015, the company utilized $0.1 billion to pay dividends while its operating cash flow was nearly $0.8 billion. We believe the company’s strong cash generation capacity enables it to easily increase its dividend rate.
DTE Energy follows a disciplined capital spending program to maintain and upgrade the reliability of its electric utility systems. The company expects its capital outlay to be $11.2–$11.8 billion through 2019, including $2.5–$2.6 billion in 2015.
DTE Energy currently has a Zacks Rank #2 (Buy). Equally well-placed stocks in the same space are Public Service Enterprise Group Inc. PEG, CMS Energy Corp. CMS and NiSource Inc. NI, each carrying a Zacks Rank #2.
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