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WEC Energy (WEC) Rewards Shareholders With 7.1% Dividend Hike

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Zacks Equity Research
·3 min read
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WEC Energy Group WEC announced that the board of directors has approved a 7.1% increase in the quarterly dividend rate. Notably, the revised quarterly dividend will be 67.75 cents. The company’s new annualized dividend rate is $2.71 and current dividend yield is 3.1%, better than the Zacks S&P 500 composite’s 1.42%.

WEC Energy’s management has been annually raising the dividend rate over the past 18 years. The board of directors approved a dividend increase this month, which led to a 238.8% total increase in annualized dividend since 2010.

For the long term, the company’s management aims at upwardly revising the dividend rate in the range of 5-7%, subject to approval of the board of directors. This would keep WEC Energy’s dividend in the targeted payout ratio between 65% and 70%.

Can WEC Energy Sustain Dividend Hikes?

WEC Energy plans to invest $16.1 billion in the 2021-2025 time period to increase efficiency and expand its infrastructure. These systematic investments are directed to regulated businesses or contracted renewable assets, which will allow the company to expand earnings by 5-7% per year over the long term and reward shareholders through dividend.

In addition, improvement in the regional economy is ensuring steady demand for WEC Energy’s services and will drive its performance. WEC Energy expects electric and natural gas sales to improve 1-1.3% each  in the 2022-2025 time frame.

Notably, ongoing increase in the customer base and its steady performance pave way for further increase in the annual dividend rate.

Zacks Rank & Key Picks

WEC Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include CenterPoint Energy Inc. CNP, National Grid Plc NGG and ALLETE Inc. ALE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CenterPoint Energy and National Grid have a long-term (three to five years) earnings growth rate of 5% and 2.7%, respectively. ALLETE delivered an earnings surprise of 25.8% in the last reported quarter.

The Zacks Consensus Estimate for CenterPoint Energy, National Grid and ALLETE’s 2021 earnings has moved up 6%, 1.6%, and 1.4%, respectively, in the past 60 days.

Price Movement

In the past 12 months, WEC Energy’ shares have lost 11.3% compared with the industry’s decline of 11.4%.

 

 

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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
 
CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
 
National Grid Transco, PLC (NGG) : Free Stock Analysis Report
 
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Zacks Investment Research