IDACORP Boosts Shareholders' Return, Hikes Dividend By 7.3%

IDACORP, Inc. (NYSE:IDA) announced that its board of directors has approved a 7.3% hike of quarterly cash dividend to 59 cents per share. The dividend hike will mark an annual dividend of $2.36. The company has not mentioned any date for the dividend distribution as of yet.

The company attributes its regular dividend distribution since 2012 to earnings growth and growing customer count. In 2016, the company hiked quarterly dividend by 7.8% or 55 cents, taking it to $2.20 per share on an annual basis.

The Regular Dividend Hikes

IDACORP is committed to achieve a target dividend payout ratio, which is set in the range of 50-60% of its sustainable earnings. The company expects 2017 annual earnings to be in the range of $3.90-$4.05. Considering the midpoint of the expected earnings guidance of $3.975 and the annual dividend of $2.36, the dividend payout ratio is 59%, which is near the upper end of the projected payout ratio.

The company’s consistent hikes since 2012 represents a 97% increase in the company’s quarterly dividend. As of yet, the company’s dividend yield is 2.7%, higher than S&P 500’s dividend of 1.8%.

What is Supporting the Hike?

IDACORP is gaining from the ongoing economic improvement in its service territories, which has boosted the demand for utility services. This in turn has aided the company in expanding customer base. Idaho Power Company, one of the main subsidiaries of IDACORP, reported 1.8% growth in the number of customers, in the past 12 months. Additionally, the company’s regulated electric operation in Idaho generates a relatively stable and growing earnings stream.

The company has completed a significant portion of the outdoor construction season and projects capital expenditure for 2017 in the range of $290-$300 million and $285-$295 million in 2018. Over the 2019-2021 time period, the company expects to invest in the range of $900-$950 million. This is expected to support dividend hike plans in the future.

Price Movement

Shares of IDACORP have returned 6.5% in the last six months outperforming its industry’s gain of 1.4%.

The company is expected to benefit from improving economics in Idaho, a rising customer count and addition of new housing units. Investment in renewables and transmission projects will drive earnings growth.

Zacks Rank and Other Stocks to Consider

IDACORP currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are NiSource, Inc (NYSE:NI) , Pattern Energy Group Inc. (NASDAQ:PEGI) and CenterPoint Energy, Inc (NYSE:CNP) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

NiSource’s Zacks Consensus Estimate for 2017 moved up nearly 0.8% to $1.19 per share in the last 60 days. Its long-term growth is pegged at 6.1%.

Pattern Energy Zacks Consensus Estimate for 2017 moved up nearly 28.5% to 27 cents per share in the last 60 days. Its long-term growth is pegged at 12%.

CenterPoint Zacks Consensus Estimate for 2017 moved up nearly 1.5% to $1.31 per share in the last 60 days. Its long-term growth is pegged at 4.3%.

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