PNM Resources, Inc. PNM revised its 2019 guidance upwards and issued guidance for 2020. The board of directors announced a 6% hike in annual dividend rate increasing it to $1.23 per share from $1.16. The company intends to distribute 50-60% of annual ongoing earnings as dividends. The current annualized dividend yield of the company is 2.38% higher than the Zacks S&P 500 composite’s 1.8%.
Details of Guidance Hike
PNM Resources raised consolidated ongoing earnings guidance for 2019 in the range of $2.13-$2.16 from $2.05-$2.11. PNM Resources announced earnings guidance for 2020 in the range of $2.16-$2.26.
The mid-point of the revised 2019 earnings guidance is $2.14, which is higher than the Zacks Consensus Estimate of $2.10. The mid-point of the 2020 earnings guidance is $2.21, in line with Zacks Consensus Estimate.
Can PNM Resources Sustain Dividend Hikes?
The company is paying dividend on a consistent basis. The latest dividend hike is the 10th consecutive increase since 2012. The consistent hike in dividend reflects on the company’s strong performance.
The company continues to invest substantially in its utility assets to provide reliable services to its customers. From 2016 to 2018, PNM and TNMP collectively invested $1,501.7 million in a utility plant that includes substations, power plants, nuclear fuel as well as transmission and distribution systems.
The company plans to invest $3.9 billion from 2019 to 2023 and expects rate-based compound annual growth of 9.6% over the same period. The planned expenditure is $300 million higher than the previous plan, owing to investment in system reliability projects at TNMP. We believe that ongoing investments will strengthen infrastructure and rate hikes will boost the financial position of the company. This will enable it to hike dividend consistently.
Utilities are Rewarding Shareholders
Dividend payment and hikes are very common for companies operating in the Utilities sector. Utility companies are preferred picks for investors owing to stable operations and their capability to reward shareholders with regular dividend pay outs.
Along with PNM Resources, other utility players have also increased the same in the second half of 2019 to boost shareholders’ value. In Jul 8, Duke Energy DUK announced that its board of directors has approved 1.85% increase in quarterly dividend rate to 94.5 cents. In Dec 6, WEC Energy Group’s WEC board of directors announced plans to hike the quarterly dividend to 63.25 cents per share from current level of 59 cents. In Dec 9, The AES Corporation’s AES board of directors announced a 5% hike in first-quarter 2020 common stock quarterly dividend to 14.33 cents.
Zacks Rank & Price Movement
PNM Resources currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PNM Resources’ shares have rallied 19.2% in the past 12 months compared with the industry’s rise of 13.8%.
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The AES Corporation (AES) : Free Stock Analysis Report
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