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NRG Energy Raises Dividend

Zacks Equity Research

The board of directors of NRG Energy Inc. (NRG) has increased its quarterly dividend by 33% to 12 cents per share. On an annualized basis, the new rate will be 48 cents per share. The raised dividend is scheduled to be paid on May 15, 2013 to shareholders of record as of May 1.

At the fourth-quarter 2012 earnings call, the board of directors of the company had announced their intention to increase the annual common stock dividend from 36 cents per share.

NRG Energy initiated its dividend in Jul 2012 and has raised the rate of payment within the first year of imbursement. This bears testimony to the company’s objective of improving shareholders’ wealth. It is also likely to serve the dual purpose of attracting more investors.

NRG Energy’s cash flow from operating activities was $1.15 billion in 2012 and cash balance was $2.1 billion as of Dec 31, 2012. Apart from dividend payment, the company’s strong financial position allows it to meet the cash requirements for share repurchases and projects in the pipeline.

In the last few months, NRG Energy made progress on significant deals. These include the commencement of operations at its 26 megawatt Borrego I Solar Generating Station in the northeast of Borrego Springs, California and closure of the Gregory cogeneration plant deal in Corpus Christi, Texas. In addition, the company received authorization to repurchase its common stock worth $200 million.

NRG Energy currently has a Zacks Rank #2 (Buy). Besides NRG Energy, other well-performing stocks in the industry include Brookfield Infrastructure Partners L.P. (BIP), Empresa Nacional de Electricidad S.A. (EOC) and Pike Electric Corporation (PIKE). All the three stocks carry a Zacks Rank #1 (Strong Buy).

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