MDU Resources Group, Inc.’s MDU board of directors announced a hike in the quarterly dividend to 20.25 cents per share, up 2.5% from the previous rate. The annual rate of the dividend is at 81 cents.
Details of the Dividend Hike
The quarterly dividend is payable on Jan 1, 2019 to shareholders of record as of Dec 13, 2018. This marks the company’s 81st year of paying uninterrupted dividend and 28th consecutive year of dividend increase.
The current annualized dividend yield of the company is 3.07% higher than industry’s 2.67% and Zacks S&P 500 Composite’s 1.88%. Rise in distributable income reflects the company’s strong balance sheet and consistent cash flow position. Notably, the company’s cash flow for operating activities increased 16.7% in the third quarter on a year-over-year basis.
What Led to the Dividend Hike?
MDU Resources operates through two-platform business models — regulated energy delivery platform as well as construction materials and services platform — which help it to overcome seasonality-related risks.
The company has a capital expenditure plan of $2,367 million for the 2018-2022 period. These investments will increase reliability of services and enable the company to serve increasing customer base effectively. MDU Resources is also making strategic acquisitions. The company expects 1-2% annual increase in customer base.
Moreover, the increasing backlog in construction materials and construction services segment is expected to boost the company’s future business. We believe that a strong cash flow, a sturdy capex plan and increasing backlogs will generate sufficient funds to meet financial commitments.
There are other players from the same sector that are increasing dividends to reward shareholders.
On Oct 12, 2018, Ameren Corporation AEE approved a 3.8% quarterly cash dividend raise on its common stock of 47.5 cents per share. On Oct 23, 2018, American Electric Power Company, Inc.’s AEP board of directors declared a regular quarterly cash dividend of 67 cents per share on the company's common stock, up 8.1%. On Nov 7 2018, Atmos Energy Corporation’s ATO board of directors announced a 8.3% hike in company’s quarterly dividend to 52.5 cents per share.
Zacks Rank & Price Movement
MDU Resources currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MDU Resources’ shares have inched up 0.6% in the past month, against the industry’s decline of 0.8%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ameren Corporation (AEE) : Free Stock Analysis Report
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
To read this article on Zacks.com click here.