Infrastructure

9 Utilities Set To Raise Dividends (DUK, AWK, AWR, XEL, DTE, AEP, CEG, D, ETR, FE, NEE, PNW, PPL, PGN)

Entergy Corporation (NYSE: ETR) recently traded at $67.33 and has a current dividend yield of about 4.9%.  Its 52-week trading range is $63.94 to $78.06. Thomson Reuters has estimates of $6.58 EPS for 2011 and $6.14 EPS for 2012.  It has paid $0.83 per quarter for five quarters in a row now but it paid $0.75 per quarter for eleven straight quarters.  The current payout is only $3.32, leaving nearly $3.00 for this year’s earnings overage even though next year is expects to see contraction in the earnings.  It may mitigate some issues with a dividend hike and with close to a $12 billion dividend hike.

FirstEnergy Corp. (NYSE: FE) has been in dividend purgatory and it is getting hard to evaluate now with that Allegheny Energy, Inc. deal has closed.  Its stock recently traded at $44.09 and has a current dividend yield of just over 5%.  Its 52-week trading range is $32.62 to $45.80.  Thomson Reuters has estimates of $3.32 EPS for 2011 and $3.30 EPS for 2012.  The quarterly payout of $0.55 per share comes to $2.20 per year, which does already come to about two-thirds of its net income being paid out to shareholders.  Keep in mind that this was an $80 stock back in 2008, so perhaps it might sacrifice more income to pay holders. The consensus time periods pending that merger, which has past, was $0.598.  Stay tuned here.

NextEra Energy, Inc. (NYSE: NEE) is the former FPL and it recently closed at $57.69 and has a current dividend yield of 3.8%.  Its 52-week trading range is $46.97 to $58.98.  Thomson Reuters has estimates of $4.48 EPS for 2011 and $4.74 EPS for 2012.  The current dividend growth saw a large 10% gap and we have two more quarters to go if it retains that $0.55 payout that comes to $2.20 per year.  This is actually well within the earnings estimates for it to raise its dividend prematurely and this was a $70 stock before the recession.  We have also screened this one out as value before.

Pinnacle West Capital Corporation (NYSE: PNW) recently traded at $44.90 and has a current dividend yield of 4.7%.  Its 52-week trading range is $33.94 to $45.64.  Thomson Reuters has estimates of $3.09 EPS for 2011 and $3.39 EPS for 2012.  The company just recently disappointed us by maintaining its same $0.525 per quarter payout ($2.10 per year).  That rate has been the same since all the way back to 2006.  Its $4.9 billion market cap keeps this Arizona power company in the arena of deal-makers as well.  Sure, Arizona real estate is not on the up and up like it was and it had to over-commit.  That is why this was a $50 stock in 2007 before the bottom dropped out of the housing market.

PPL Corporation (NYSE: PPL) recently traded at $27.88 and has a current dividend yield of right at 5% for investors.  Its 52-week trading range is $23.38  to $28.02.  Thomson Reuters has estimates of $2.60 EPS for 2011 and $2.48 EPS for 2012, and it has paid $0.35 per quarter for six consecutive quarters and paid only $0.345 per quarter before then.  At issue is that huge new offering of a capital raise for it to close a U.K. acquisition.  We think a payment hike needs to come, but we also know that integration time and a capital raise of stock and debt can get in the way of dividend investor progress.  Keep in mind that this was a $50 stock in mid-2008 but its market cap today is about $16 billion.

Progress Energy Inc. (NYSE: PGN) recently traded at $48.57 and has a current dividend yield of 5.1%.  Its 52-week trading range is $36.82 to $49.03.  Thomson Reuters has estimates of $3.12 EPS for 2011 and $3.21 EPS for 2012.  The Duke Energy Corporation (NYSE: DUK) merger effectively has Progress as the target so we will pass on offering much more color here, other than that we have been expecting a payout hike for some time.

Again, mergers can change the outcome of dividends.  That is part of life.  Our analysis is taking these into consideration on a standalone basis.  It is possible that some of these will not hike their payouts, but we are close to certain that most of these are within the boundaries that can allow for dividend hikes in the coming weeks or months.

JON C. OGG