Ameren Corporation Rewards Shareholders with Five Consecutive Annual Dividend Hikes (AEE)
By: Ned Piplovic,
Ameren Corporation (NYSE:AEE) — a Midwest utility holding company — has rewarded its shareholders with five consecutive annual dividend hikes, as well as a double-digit-percentage total return over the past 12 months and currently offers a 2.9% dividend yield.
After paying a steady $2.54 annual dividend for more than a decade, the company cut its annual dividend payout nearly 40% in 2009. The company paid the same annual amount in 2010 and then started a series of seven annual dividend hikes over the past eight years, including the last five consecutive annual dividend hikes.
Ameren Corporation’s share price followed a path similar to the company’s dividend over the past decade. The share price dropped more than 55% in 2008 but resumed its uptrend in early 2009 and has advanced more than 170% since the 2008 decline. The rising share price and the streak of annual dividend hikes combined to provide shareholders with attractive total returns over the past several years.
Investors convinced that the share price could continue its uptrend a little longer should consider taking a position prior to the company’s next ex-dividend date on September 11, 2018, to ensure eligibility for the next round of dividend distributions on the September 28, 2018, pay date.
Ameren Corporation (NYSE:AEE)
Headquartered in St. Louis, Missouri, and tracing its origins as the Missouri’s Union Electric Company to 1929, the Ameren Corporation operates as a public utility holding company. The company incorporated under its Ameren name in 1997 following the merger of the Union Electric Company and the neighboring Central Illinois Public Service Company. The new business entity operates through four business segments. While the Ameren Illinois segment provides electric and natural gas services in Illinois, Ameren Missouri operates energy centers and provides electric and natural gas services in Missouri. Additionally, the Ameren Transmission segment invests and develops new transmission projects within the region and the Ameren Services segment provides shared and administrative services for the Ameren Corporation’s other segments. The company generates, transmits and distributes electricity to 2.4 million customers, as well as transmits and distributes natural gas to approximately 900,000 natural gas residential, commercial and industrial customers. The company has more than 10,000 megawatts (MW) of electricity generating capacity from coal, nuclear and natural gas, as well as from renewable sources, such as hydroelectric, methane gas and solar.
The company’s current $0.4575 quarterly dividend payout is 4% higher than the $0.44 amount from the same period last year. This new quarterly distribution corresponds to a $1.83 annualized payout and a 2.9% dividend yield. The rising dividend outpaced the increasing rate of annual dividend hikes, resulting in the current yield trailing 14% below the company’s 3.4% average yield over the past five years. However, the Ameren Corporation’s current yield is 14% ahead of the 2.55% average yield of the entire Utilities sector and more than 60% higher than the 1.78% average yield of the company’s peers in the S&P 500 Index.
The past five years of annual dividend hikes advanced the company’s total annual dividend amount 14%, which is equivalent to a 2.7% average annual growth rate. However, the annual dividend amount grew at an average annual rate of 3.6% over the past three years. Based on the company’s record of dividend hikes since 2010, the next quarterly dividend hike should occur with the December 2018 payout.
The company’s share price declined 12% between the onset of the trailing 12-month period and its 52-week low of $52.59 on February 8, 2018. However, the share price reversed its trend and advanced nearly 30% by the time it reached its 52-week high of $67.76 on August 14, 2018. Since peaking in mid-August, the share price pulled back 7% and closed on August 31, 2018, at $62.83. This closing price was 5% higher than it was 12 months earlier, nearly 20% above the February 2018 low and 90% higher than it was five years ago.
The share price growth and steady annual dividend hikes provided a 9.2% total return over the past 12 months and a 70% total return over the past three years. Shareholders doubled their investment over the past five years with a total return of more than 112%.
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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.