PNM Resources (PNM) Hikes Annual Dividend Rate by 10%
The board of directors of electric utility provider, PNM Resources, Inc. PNM, approved an annual dividend hike of 10% or 8 cents per common share to take the payout to 88 cents per share. This brings the quarterly dividend to 22 cents per share. The revised dividend will be payable on Feb 12, 2016, to shareholders of record on Jan 25, 2016.
Despite raising its dividend, PNM Resources’ dividend yield of 3.1% still lags the industry average of 3.29%. However, the company is working its way up to meet the benchmark.
This new dividend payout is in line with the company’s target payout of 50–60% of annual earnings. In the third quarter of 2015, PNM Resources posted earnings of 76 cents, beating the Zacks Consensus Estimate of 74 cents by 2.7%. Earnings also saw a jump of 11.8% from the prior-year level of 68 cents per share primarily on account of warmer weather, renewable rate relief and increased load.
The company has inked transmission service deals of more than 400 megawatts of wind power to be sold to utilities in California starting 2017. In order to further improve reliability in the service sector, the company is looking to invest $16 million in additional projects. PNM Resources has raised its capital spending guidance to $2.3 billion from $2.2 billion.
PNM Resources also intends to invest $50 million in Texas—New Mexico Power Company to support transmission and distribution growth.
The company anticipates 79% earnings growth by 2019.
Another utility, WEC Energy Group WEC recently announced that it intends to approve a quarterly dividend hike of 8.2% or 12 cents per common share over the present quarterly rate to take the payout to 49.50 cents per share. The revised dividend will be payable on Mar 1, 2016, to shareholders of record on Feb 12, 2016.
Zacks Rank
PNM Resources currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the utility space include FirstEnergy Corp. FE and NextEra Energy, Inc. NEE, both carrying a Zacks Rank #2 (Buy).
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