2 Utilities Offer 3.5%-Plus Yields with 10-Plus Years of Continued Dividend Hikes
By: Ned Piplovic,
Two regional utilities continue to reward their shareholders with continued dividend hikes, yields in the 3.5% to 4% range and long-term asset appreciation.
These two companies have tripled their respective annual dividend distribution amounts over the last 15 years and currently pay an annual dividend of approximately $1.50 per share.
One of the stocks goes ex-dividend on May 23 and the other one on June 7 with pay dates coming about three weeks after their respective ex-dividend dates.
Avista Corporation (NYSE:AVA)
Avista Corporation operates as an electric and natural gas utility company. The company operates the Avista Utilities and the Alaska Electric Light and Power Company business segments. The Avista Utilities segment distributes natural gas and generates, transmits and distributes electricity in Idaho, Oregon, Montana and Washington state. This segment also owns hydroelectric, thermal and wind generation facilities with the total capacity approaching 2,000 megawatts (MW). The Alaska Electric Light and Power Company segment owns and operates electric generation, transmission and distribution facilities located in Juneau, Alaska.
At the end of 2016, this segment’s five hydroelectric generation facilities had a combined capacity that exceeded 100 MW with another 110 MW coming from its diesel-powered facilities. This segment serves approximately 17,000 customers, including city, state and federal governmental entities located in Juneau, as well as a mine located in the area. Additionally, the company fabricates sheet metal electronic enclosures, parts and systems for the computer, construction, telecom, renewable energy and medical industries. The Avista Corporation was founded in 1889 and is headquartered in Spokane, Washington.
The current quarterly dividend distribution of $0.375 converts to a $1.43 annual payout with a 3.5% dividend yield. The company boosted its quarterly payout in the first quarter by 4.4%. That payout is 12% to 15% higher than the dividend hikes in the previous two years.
The company has a 128-year-long record of paying a dividend and a 15-year-long record of consecutive dividend hikes. Over the past 15 years the annual dividend rose at an average rate of 7.5% every year, effectively tripling the annual distribution amount over that period.
After an initial 15% upsurge in May and June 2016, the share price dropped almost 20% from the 52-week high of $45.22 in June to its 52-week low of $37.78 by the end of January 2017. Since the January low, the share price rose 9.1% and closed on May 18, 2017, at $41.56, which is about 9% shy of the 52-week high but 4.7% above the May 2016 share price.
PPL Corporation (NYSE:PPL)
The PPL Corporation is a regional utility company with electricity and natural gas distribution operations in the United States and the United Kingdom. In the United States, the company provides natural gas distribution to 325,000 customers and electricity distribution to about 2.5 million customers in Kentucky, Virginia, Tennessee and Pennsylvania. In the United Kingdom, the PPL Corporation operates 15 electricity distribution networks. PPL Corporation, founded in 1920, is headquartered in Allentown, Pennsylvania.
The current quarterly dividend distribution of $0.395 is equivalent to a $1.58 annual payout per share and a 4.1% yield. Last quarter’s 4.4% quarterly dividend bump, is just the most recent in a series of 18 consecutive annual dividend hikes. Since the most recent dividend drop in 1999, the annual distribution grew at an average annual rate of 6.6%, which more than tripled the annual dividend amount over the past 18 years.
The share price dropped 14.5% between May and October 2017 to reach its 52-week low. Since October, the price reversed course, recovered all the loses and rose back to May 2016 levels. The current price is only 3.6% below the 52-week high and 2.7% above the share price from one year ago.
After spending six months below the 200-day moving average (MA), the 50-day MA crossed above the 200-day MA in mid-March. The current 50-day-MA is almost 7% above the 200-day MA and continues to rise, which is a possible indication that the share price has plenty of room left on the upside to continue its rise at least in the short term.
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