MGE Energy Inc.’s MGEE board of directors has approved a quarterly dividend hike of 5%. The revised dividend of 32.25 cents per share on common stock will be distributed on Sep 15, 2017 to shareholders of record as of the close of business on Sep 1.
MGE Energy’s management has consistently increased dividend payout annually in the last 42 years. This recently approved rate raises the annual dividend rate by 6 cents from the last dividend rate of $1.23 per share to $1.29 per share and is the largest hike in the last 30 years.
The current dividend yield of the company is 2.02% better than the S&P 500’s 1.87%.
Factors Driving the Dividend Hike
MGE Energy's primary focus for the foreseeable future revolves around core utility customers and creating long-term value for shareholders. The company is taking several initiatives to meet the challenge of providing customers with reliable power at competitive prices by investing in more efficient generation projects, including renewable energy sources.
The company's focus on improving earnings while controlling operating and fuel costs, maintaining safe and efficient operations along with providing strong credit standing consistent with financial strength is likely to aid in addition of more customers and retaining the old ones.
Free cash flow of the company at the end of first half of 2017 was $25.5 million. Notably, this was sufficient to support the dividend hike announced by the board of directors.
MGE Energy has outperformed the industry in the last twelve months. The company’s shares gained 14.5% compared with the industry’s gain of 8.2%.
The outperformance can be attributed to the company’s healthy performance in terms of its revenue numbers mainly due to a rise in operating revenue number in all of its Electric, Gas and Non-regulated Energy business segments in the last one year.
Zacks Ranks & Key Picks
MGE Energy carries a Zacks Rank #4 (Sell).
Investors can consider better-ranked stocks like NextEra Energy, Inc. NEE, Ameren Corporation AEE and CenterPoint Energy, Inc. CNP from the same industry. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NextEra posted second-quarter 2017 earnings from continuing operations of $1.86 per share, beating the Zacks Consensus Estimate of $1.76 per share by 5.68%. The company’s 2017 estimates increased by 5 cents to $6.70 per share in the last 90 days.
Ameren posted second-quarter 2017 earnings from continuing operations of 79 cents per share, beating the Zacks Consensus Estimate of 69 cents per share by 14.49%. The company’s 2017 estimates increased by 3 cents to $2.80 per share in the last 90 days.
CenterPoint Energy posted second-quarter 2017 earnings from operations of 29 cents per share, beating the Zacks Consensus Estimate of 21 cents per share by 38.10%. The company’s 2017 estimates increased by 3 cents to $1.31 per share in the last 90 days.
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