Duke Energy (DUK) Announces 4.1% Quarterly Dividend Hike

Duke Energy Corporation (NYSE:DUK) announced that its board of directors has approved a quarterly cash dividend of 89 cents per share on its common stock. This would mark a quarterly increase of 3.5 cents or 4.1%.

Per the company, the dividend will be payable on Sep 18, 2017 to stockholders on record as of Aug 18, 2017. The estimated annual yield on the dividend is 4.3%.

The Regular Distribution Hikes

Duke Energy has been raising its cash dividend per share every year and this is the 91st consecutive year in which the company has continued with the same trend. In July, 2016, Duke Energy announced a quarterly cash dividend increase of 3.6% on its common stocks.

Duke Energy has a stable dividend payment history. As of Mar 31, 2017, the company had cash and cash equivalent worth $878 million compared with that of $392 million at Dec 31, 2016. The company has maintained its record of increasing its quarterly dividend rate every year since Jan 2007 on the basis of its financial strength.

In the first quarter of 2017, Duke Energy paid dividend worth $600 million to its shareholders compared with $570 million paid in the year-ago quarter. It continues to target annual growth in dividend while being consistent with its long-term 4%–6% earnings growth rate. Through 2021, the company is focused to maintain its long-term dividend payout ratio in the range of 70%–75% of its adjusted earnings per share.

Factors Supporting Regular Dividend Hike

Duke Energy has been investing heavily in infrastructure and expansion projects across its service territory. Per the long-term plans of the company, it aims to spend $30 billion for electric utilities and infrastructure, $6 billion for gas utilities and infrastructure and $1 billion for commercial renewable for the 2017–2021 period. These investments are expected to drive the company’s earnings base growth in the combined electric and gas businesses of approximately 6%, over the next five years.

The company’s additional generation projects such as dual-fuel capabilities and combined heat and power facilities to increase the flexibility of its system are likely to boost its performance in the time ahead.

Price Movement

Duke Energy has outperformed the Zacks categorized Utility- Electric Power industry, in the last six months. During this period, the company’s shares gained 8.2% compared with the industry’s gain of 4%.

Duke Energy’s strong focus on its core domestic regulated as well as highly-contracted renewable business has well impacted its stable financial position and streamlined its portfolio, which in turn might have driven this outperformance.

Zacks Rank and Key Picks

Duke Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stock in the same space are Pattern Energy Group Inc. (NASDAQ:PEGI) , sporting a Zacks Rank #1 (Strong Buy), and Algonquin Power & Utilities Corp. (TO:AQN) and NextEra Energy, Inc. (NYSE:NEE) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy’s Zacks Consensus Estimate for 2017 moved up nearly 375% to $0.38 per share in the last 60 days. The company also delivered a positive earnings surprise in two out of the last four quarters with an average surprise of 77.28%.

Algonquin Power’s Zacks Consensus Estimate for 2017 moved up nearly 8.9% to $0.49 per share in the last 60 days. The company delivered a positive earnings surprise in two out of the last four quarters with an average surprise of 55.88%.

NextEra Energy, Inc. Zacks Consensus Estimate for 2017 moved up nearly 0.6% to $6.67 per share in the last 60 days. The company also delivered a positive earnings surprise in three out of the last four quarters with an average surprise of 4.28%.

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