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IdaCorp Hikes Dividend by 13.2%

Zacks Equity Research

The board of directors of electricity company IdaCorp, Inc. (IDA) has approved a 13.2% increase in the quarterly dividend. The new quarterly dividend will be 43 cents. The revised dividend is payable on Dec 2, 2013, to shareholders of record at the close of business on Nov 6. The previous increase in the quarterly dividend rate from 33 cents to 38 cents was made on Sep 20, 2012.

The new annualized dividend rate will come to $1.72, 20 cents, higher than the previous annualized rate of $1.52 per share. The current dividend yield of the company is 3.57%, which is significantly higher than the industry yield of 2.03%. IdaCorp is increasing its dividend at regular intervals and strives to achieve a dividend payout ratio of 50% to 60%.

The Board of Directors is expected to increase the payout again in excess of 5% in Sep 2014. This can only happen if the company achieves certain specified conditions.

IdaCorp has been a consistent performer with its earnings surpassing estimates in the last four quarters with an average beat of 20.02%. The strong performance enables the company to generate ample operating cash flow to reward its shareholders. In the first half of 2013, IdaCorp’s cash flow from operating activities was $114.2 million out of which $38.3 million was used for dividend payment.
IdaCorp is also making consistent investments to improve its generation, transmission, and distribution facilities. We expect these investments to increase reliability of its services and help it to retain and attract new consumers.  Incremental cash flows will help fund the increased dividend payment.

IdaCorp, Inc. currently retains a Zacks Rank #2 (Buy). The current dividend yield of the company exceeds that of other utilities having a similar Zacks Rank of #2. Northwestern Corporation (NWE), NV Energy, Inc. (NVE) and PNM Resources, Inc. (PNM) have a dividend yield of 3.46%, 3.22% and 2.94%, respectively.

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