CMS Energy Corporation CMS recently announced that its board of directors has approved a 6.5% quarterly dividend hike on its common stock to 40.75 cents per share. Post issuance of the new rate, the annualized dividend will be $1.63. The raised dividend will be paid on Feb 28 to its shareholders of record as of Feb 7.
Notably, this hike came in line with the company’s long-term dividend growth expectations of 6-8%.
The current annual dividend yield of the company is 2.5%, based on its share price as of Jan 16, higher than the Zacks S&P 500 composite’s yield of 1.71%.
Factors Supporting Dividend Hikes
A favorable financial position enables CMS Energy to pay scrumptious dividends and increase dividend payouts at regular intervals, apart from investing in infrastructure projects. As of Sep 30, 2019, the company’s cash and cash equivalents totaled $403 million, up from $153 million at 2018-end. Moreover, in third-quarter 2019, the company generated cash from operating activities of $1,395 million.
Dividend Trends Among Utilities
The Utilities sector is known to be a fundamentally strong sector, as demand for utility services remains immune to economic cycle fluctuations. Thus, stable earnings and cash flow enable utilities to reward shareholders with regular dividends and share buybacks. This, in turn, positions them in investors’ good books.
In this regard, it is imperative to mention that last December, AES Corp.’s AES management approved a 5% hike in its first-quarter 2020 common stock quarterly dividend to 14.33 cents, taking the annualized payout to 57.32 cents per share. Ameren Corporation AEE too approved a 4.2% quarterly cash dividend raise in its common stock of 49.5 cents per share in October 2019.
In the past 12 months, shares of CMS Energy have jump 31.9% compared with the industry’s growth of 25.8%.
Zacks Rank & A Stock to Consider
CMS Energy currently carries a Zacks Rank #4 (Sell).
A better-ranked stock in the same space is Entergy Corporation ETR, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Entergy Corporation delivered a positive earnings surprise of 4.79%, on average, in the last four quarters. The company currently has a solid long-term earnings growth rate of 7%.
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Ameren Corporation (AEE) : Free Stock Analysis Report
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