WEC Energy (WEC) Rewards Shareholders With 7% Dividend Hike
WEC Energy Group WEC announced that its board of directors has approved a 7% increase in its quarterly dividend rate. The new dividend rate will be 83.5 cents per share compared with the previous quarter’s 78 cents, payable on Mar 1, 2024, to stockholders of record as of Feb 14, 2023.
This increase resulted in an annualized dividend of $3.34 per share compared with the previous level of $3.12. The current dividend yield is 3.82%, higher than the Zacks S&P 500 Composite's average of 1.38%. The board's decision is consistent with WEC’s ongoing plan targeting a dividend payout ratio of 65-70% of earnings.
Can WEC Sustain Dividend Hikes?
Owing to efficient management and proper execution of plans, WEC Energy came up with strong results in the last reported quarter. It expects compound earnings growth of 6.5-7% in the 2023-2027 period. The company is focused on improving operating efficiency. It reduced other operations and maintenance costs by 3.4% in 2022 from the 2021 level. Proper management of expenses will boost WEC’s margins and earnings.
The company plans to invest $23.4 billion during 2024-2028. Based on improving conditions in its service area, WEC continues to witness an uptick in customer volumes. It expects weather-normalized electric and gas sales for the Wisconsin segment to be in the range of 0.7-1% every year during 2025-2027.
WEC Energy is investing in cost-effective zero-carbon generation sources like solar and wind. The company is also focused on replacing older generation facilities with zero-carbon-emitting renewable and natural gas-based generation by 2025. Further, it aims to achieve a 60% reduction in carbon emissions from its electric generation fleet by the end of 2025 and an 80% by the end of 2030 from the 2005 baseline. WEC has retired 1,900 megawatts (MW) of coal-fired plants since 2018 and aims to remove another 1,500 MW of fossil-fueled generation by 2026.
WEC’s growth prospects and ability to further enhance its performance indicate that management will have enough funds to sustain its shareholder-friendly initiatives in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
In the past few months, Global Water Resources GWRS, Spire Inc. SR and IDACORP Inc. IDA have raised their quarterly dividend rate by 1%, 4.9% and 5.1%, respectively.
The Zacks Consensus Estimate for Global Water Resources’ 2023 earnings is pegged at 29 cents per share, implying an increase of 7.4% in the past 60 days. GWRS’ current dividend yield is 2.34%.
The Zacks Consensus Estimate for Spire’s fiscal 2024 earnings is pegged at $4.37 per share, implying an increase of 0.9% in the past 30 days. SR’s current dividend yield is 4.82%.
The Zacks Consensus Estimate for IDACORP’s 2023 earnings is pinned at $5.12 per share, implying an increase of 3% in the past 60 days. IDA’s current dividend yield is 3.43%.
Price Performance
In the past month, WEC’s shares have risen 1.1% compared with the industry’s average growth of 3.3%.
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Zacks Rank
WEC Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
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