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WEC Energy (WEC) to Reward Shareholders Via 7.1% Dividend Hike

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The board of directors of WEC Energy Group WEC recently announced plans to hike the dividend for first-quarter 2021 by 4.5 cents per share or 7.1%. This will bring the quarterly dividend total to 67.75 cents per share and the annual dividend to $2.71.

If the directors approve this hike at their scheduled meeting come January next year, the dividend will be payable Mar 1, 2021, to the company’s stockholders of record on Feb14, 2021. This dividend hike is consistent with the company’s targeted dividend payout ratio of 65-70% of earnings. Moreover, the expected 2021 dividend growth is on par with the utility's longer-term earnings per share growth of 5-7%.

Additionally, the company provided its earnings guidance for 2021, which is expected to be in the range of $3.99-$4.03 per share. Also, the Zacks Consensus Estimate for 2021 is pegged at $4 per share.

Can This Dividend be Sustained?

The utility has been consistently raising its dividends. Prior to this, in January 2020, WEC Energy upped the annual dividend rate to $2.53, marking an increase of 7.2% and enhancing its shareholders’ value in turn.

The company’s net cash provided by operating activities at the end of the first nine months of 2020 was $1,949.7 million, up from $1,840.7 million at the end of the comparable period in 2019. This outperformance was led by higher revenues owing to operational efficiency along with reopening of economic activities.

Also, the utility is making efforts to grow both organically and inorganically, which are boosting its performance as well as cash flow. At third-quarter end, WEC Energy had an additional 11,000 electric and 32,000 natural gas customers from the respective year-ago quarter’s reported figures. Also, it expects electric and natural gas sales to improve in the range of 1.2-1.3% each in the 2022-2025 time frame. Moreover, the company plans to invest $16.1 billion for the 2021-2025 forecast period. Backed by these positives, its steady dividend raises seem sustainable.

Other Utilities Hiking Dividend

Apart from WEC Energy, other utility companies like MDU Resources MDU, Chesapeake Utilities Corporation CPK and Essential Utilities Inc WTRG are rewarding their shareholders with dividend hikes despite the ongoing pandemic.

MDU Resources’ new annualized dividend is 85 cents per share while Chesapeake Utilities hiked its dividend by 8.6% to 44 cents. Also, Essential Utilities raised its quarterly dividend by 7% to 25.07 cents per share.

Zacks Rank & Price Performance

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past six months, shares of the company have gained 1.7%, outperforming the industry’s 0.1% rise.

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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
Chesapeake Utilities Corporation (CPK) : Free Stock Analysis Report
MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
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