This Week in Utilities: Surprise Dividends and Coal Conversions
Jul 22nd 2013 11:01AM
Updated Jul 22nd 2013 11:02AM
Utilities were busy last week, making moves to maximize profit potential. With ahead of schedule dividend boosts, coal to biomass conversions, and more, here's what you need to know to stay on top of your dividend stocks' latest moves.
The early bird gets the dividend worm
Wisconsin Energy is putting dividend profits in investors' pockets earlier than expected. The utility announced last week that is upping its distribution 12.5% starting in Q2 2013, instead of the previously planned Q1 2014. At current share prices, this represents a dividend yield increase from 3.14% to 3.54%.
"Today's action by our board of directors is underscored by the company's sound financial position and positive free cash flow," said Chairman, President, and CEO Gale Klappa in a statement. "This marks yet another positive step toward making our dividend payout more competitive with our peers across the utility industry."
Looking ahead, Wisconsin Energy also reaffirmed its dividend payout ratio goal of 65%-70% of earnings in 2017.
Weighing in on biomass
Dominion Energy brought on line the first of three biomass power plants expected to add around 153 MW of generation capacity to its operations. All three plants were previously coal-fired; with this latest conversion, they are fueled by waste-wood scraps from regional timber operations.
"Today marks another achievement guided by Dominion's philosophy that balanced fuel diversity - from coal to natural gas to nuclear to renewables - leads to reasonable rates that best serve the needs and interests of customers and shareholders," said Dominion Generation CEO David Christian in a statement.
The other two units are expected to come on line by 2014, with total conversion costs estimated at $165 billion.
Down with the old
NextEra Energy's Florida Power and Light subsidiary cleared the way for its latest $1 billion power plant this week with a farewell wave and 450 pounds of explosives. The utility demolished a 60-year-old facility to clear a spot for its new 1,277 MW combined-cycle natural gas facility.
According to NextEra, its "Clean Energy Center" will use 35% less fuel per MW-hour, cut carbon emissions in half, and reduce air pollution by more than 90%. With the old infrastructure out of the way, construction is expected to be completed in 2016.
Integrys takes the rate
Integrys got the regulatory thumbs-up for a $220 million modernization project in Wisconsin last week. While the main reason for the renovation is lack of electricity reliability, the upgrade will add on 1,000 miles of distribution line and 400 miles of distribution automation equipment.
For Wisconsin Public Service (Integrys' subsidiary) customers, the project's costs will be passed on to them at a rate increase of around $5 per month for the average residential user.
Is Exelon responsible?
Exelon released its "2012 Corporate Sustainability Report" last week, highlighting the corporation's recent environmental efforts. A report like this isn't just for socially responsible investors - it can also provide perspective on a company's current progressiveness, as well as future prospects.
As the first report since its March 2012 merger with Constellation Energy, this publication holds new meaning for longtime energy investors. Safety and reliability seem to be key themes throughout, with record low outages and record high safety standards throughout the company. Exelon also gave a nod to its environmental developments, adding on 404 MW of wind and 31 MW of solar.
Stay current on electricity
The world of utilities is changing fast, and dividend stocks aren't the stable stalwarts they once were. Be sure to check back weekly for the latest on your portfolio's moves, and you'll be well on your way to electrifying earnings.
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The article This Week in Utilities: Surprise Dividends and Coal Conversions originally appeared on Fool.com.Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo. The Motley Fool recommends Dominion Resources, Exelon, and Wisconsin Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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