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POR to Return More to Shareholders

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The board of directors of electricity company Portland General Electric Company (POR) has approved a 0.5 cent increase to the quarterly dividend of the company. The new quarterly dividend will be 27.5 cents. The revised dividend is payable on Jul 15, 2013, to shareholders of record at the close of business on Jun 25.

The new annualized dividend rate will be $1.10, reflecting growth of 1.8% from the prior rate of $1.08. The previous increase in the quarterly dividend rate from 26.5 cents to 27 cents was made on Feb 22, 2012.

The current dividend yield of the company is 3.48, which is significantly higher than the industry yield of 1.97. Portland General Electric is increasing its dividend in regular intervals to achieve a dividend payout ratio of 50% to 70%.

In 2013, Portland General Electric has made progress in its strategic initiatives, including starting construction on Port Westward 2. These initiatives will help the company to enhance its production capabilities and remain competitive. In addition, the projected capital expenditure of $505 million to $525 million for the year will help in continuing development activities.
The company is a strong cash flow generator and boasts a healthy cash balance. Net cash flow from operating activities in the first quarter of 2013 was $165 million, with $20 million used for dividend payouts. The strong cash flow generating ability will easily provide the extra amount required for the increased dividend payment.

In addition to Portland General Electric Company, other utility operators have also hiked their quarterly dividend rates. American Electric Power Co. (AEP) increased its quarterly dividend rate by 4% to 49 cents. ALLETE Inc. (ALE) hiked the quarterly rate by 3.3% to 47.5 cents. Xcel Energy (XEL) raised its quarterly dividend rate by 3.7% to 28 cents.

Based in Portland, Ore., Portland General Electric is a fully integrated electric utility electricity company that caters to nearly 830,000 residential, commercial and industrial customers in the state. Portland General Electric Company currently retains a Zacks Rank #2 (Buy).

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