ALLETE, Inc Offers 4.7% Quarterly Dividend Boost (ALE)
By: Ned Piplovic,
ALLETE, Inc. (NYSE:ALE) boosted its quarterly dividend distribution 4.7% from $0.535 to $0.56 and currently offers its shareholders a 3.1% dividend yield.
While the share price declined slightly in the past 60 days, the company is so confident in its future growth that it revised its average long-term earnings growth outlook upward. One of the factors that influenced the revision was a recent purchase of additional wind power generating capacity from General Electric (NYSE:GE).
ALLETE will distribute its first-quarter dividends to all its shareholders of record prior to the next ex-dividend date, which will occur on February 14, 2018, just two weeks before the company’s next pay date on March 1, 2018.
ALLETE Inc. (NYSE:ALE)
Headquartered in Duluth, Minnesota, and founded in 1906, ALLETE, Inc. is an energy company that operates through three segments — Regulated Operations, ALLETE Clean Energy and U.S. Water Services — and six wholly-owned subsidiaries. The company provides regulated electric, natural gas and water services in northwestern Wisconsin to nearly 40,000 customers, as well as regulated utility electric service in northeastern Minnesota to approximately 145,000 retail customers and 16 non-affiliated municipal customers. ALLETE, Inc. generates electricity from coal-fired, natural gas-fired, biomass co-fired, hydroelectric, wind, solar and other sources.
The company hiked its dividend payout 4.7% from $0.535 in the previous quarter to the current $0.56 amount. This new amount yields 3.1% and is equivalent to a $2.24 annualized payout. The current 3.1% dividend yield is on par with the 3.12% simple average yield of the entire Utilities sector.
While the company started paying dividends in 1945, comparable dividend data goes back to September 2004, when the company spun off ADESA, Inc., and completed a 1-for-3 reverse stock split. Since the 2004 reverse split, the company missed the annual dividend boost only once. In 2010, ALLETE paid the same $1.76 annual dividend as it did in 2009 but resumed rising its annual payouts in 2011.
Over the past eight years since 2011, the company has grown its annual dividend payout at an average rate of 3.1% per year and enhanced its total annual payout by 27%. However, since 2004, the company managed a 4.6% annual growth rate and doubled its total annual dividend distribution over the past 14 years.
The company’s share price started its current trailing 12-month period from its 52-week low of $64.37 on January 30, 2017. From that low, the share price rose relatively consistently with only minor volatility and just four small dips. The share price ascended more than 25% towards its 52-week high of $80.50, which it reached on November 30, 2017. Over those 10 months, the share price rose at an average growth rate of 2.3% per month.
However, after peaking in late November, the share price gave back 54% of its gains over the previous 10 months and closed on January 30, 2018, at $64.37. That closing share price was still 11.6% higher than it was 12 months earlier and 53% above its level from five years prior.
The company offered its shareholders a combined total return on investment of 15.3% over the past 12 months. Over the past three years, the total return came in at more than 34% and it was more than double that — 78% — over the past five years.
When the company announced on January 24, 2018, that its current quarterly dividend would increase, Al Hodnik, ALLETE’s Chairman, President and CEO announced as well that “Consistent with this dividend action and our broader confidence in our future growth, we are also upward revising our stated annual average long-term earnings growth outlook from a ‘minimum of 5 percent’ to a ‘range of 5-7 percent’.”
Additionally, just one week prior to the current dividend hike announcement, the company shared that its ALLETE Clean Energy section had purchased wind turbines from GE Renewable Energy with a total output capacity of 40 megawatts. The additional capacity is just a portion of the additional 400 megawatts that the company plans to add through 2021 and which will qualify for an 80% Production Tax Credit (PTC).
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.