High Dividend Stocks: PPL Corporation (NYSE:PPL)
By: Ned Piplovic,
The PPL Corporation (NYSE:PPL) — an electricity distribution utility company — continues rewarding its shareholders with an above-average dividend yield and a long streak of consecutive annual dividend boosts, which are characteristics of most high dividend stocks.
In addition to high dividend yields and long records of steady dividend income growth, high dividend stocks worth consideration will generally offer at least moderate share price appreciation and deliver positive total returns. PPL certainly met the last of those requirements for consideration as one of the high dividend stocks with a total return of more than 20% over the past 12 months.
PPL’s share price lost more than half of its value during the 2008 financial crisis. However, after shaking off any residual effects of the crisis and embarking on a six-year uptrend, PPL’s share price gained nearly 75% before its next pullback in late 2017 and the first half of 2018. However, the share reversed direction immediately and embarked on the current long-term uptrend.
Just over the past 12 months, the share price already recovered nearly 30% of its recent losses and continues to rise. Interested investors who believe that the current uptrend might continue over the next few periods should consider taking advantage of the discounted share price. However, before taking any action, investors should conduct their own analysis to confirm the stock’s outlook and ensure compatibility with their own investment strategy. Those investors that choose to take a long position — or expand their existing position — in the PPL stock can enjoy the rising dividend income payouts while waiting for the capital gains to materialize.
PPL Corporation (NYSE:PPL)
Headquartered in Allentown, Pennsylvania, and founded in 1920, the PPL Corporation is a utility holding company that delivers electricity in the United States and the United Kingdom. The company provides utility services through three business segments — U.K. Regulated, Kentucky Regulated and Pennsylvania Regulated. In addition to providing electricity distribution services to retail customers, PPL also provides wholesale electricity to 10 municipalities in Kentucky. As of June 2019, the company’s power grid covered more than 36,000 square miles of service territory on two continents. The infrastructure included approximately 1,000 substations and nearly 220,000 miles of electric lines and provided electrical power to more than 10 million customers in Pennsylvania, Kentucky, Virginia, Tennessee and the United Kingdom. Furthermore, PPL also deliver natural gas and generate electricity in Kentucky. In addition to the traditional utility distribution, PPL is the parent company of Safari Energy, LLC — one of the leading providers of solar power solutions for commercial customers in the United States.
High Dividend Stocks: PPL Corporation Share Price
Following the 2017-2018 correction of nearly 30%, the share price embarked on an uptrend in early June 2018 and this uptrend extended well into the trailing one-year period. Riding this uptrend, PPL’s share price gained more than 15% over the first five months of the trailing 12-month period.
Unfortunately, by mid-November 2018, downward pressure from the overall market correction reversed PPL’s trend, pushed the share price toward its 52-week low and erased all gains since the onset of the 12-month period. The 52-week low of $27.59 on December 24, 2018, was even slightly lower than the $27.84 share price on June 20, 2018.
Once relieved from the downward pressure of the overall market correction at the end of 2018, the PPL share price began recovering immediately and regained all its late-2018 losses before the end of February 2019. After recovering its losses, the share price continued rising and closed at $32.74 on March 14, 2019.
Unfortunately, the share price dropped back below the $30 level by mid-May, before heading higher again and gaining nearly 7% in the first three weeks of June. The share closed at the end of trading on June 21, 2019, at $31.74, or 3.1% below the peak level in mid-March. However, the June 21 closing price was 14% higher than it was one year earlier and 15% above the 52-week low in late-December 2018.
High Dividend Stocks: PPL Corporation Dividends
PPL’s current $0.4125 quarterly distribution is 0.6% higher than the $0.41 payout from the same period one year earlier. This new quarterly amount corresponds to a $1.65 annual dividend payout and currently yields 5.2%, which is 9.4% above the company’s own 4.75% average yield over the past five years.
In addition to outperforming its own five-year dividend yield average, PPL’s current 5.2% dividend yield outperformed the 2.06% simple average dividend yield of the overall Utilities sector by more than 150%. PPL’s current dividend yield is also 114% higher than the 2.43% average yield of the Electric Utilities industry segment. Moreover, PPL’s current yield also outperformed by 36% the 3.81% average yield of the Electric Utilities segment’s only dividend paying companies.
PPL has paid a distribution every quarter since initiating dividend distributions in 1946. Additionally, the company had hiked its annual payout amount over the past 19 years. Over that period, the company’s total annual dividend payout rose 230%, that level of advancement corresponds to an average annual growth rate of 6.5%.
PPL’s current dividend payout ratio of 64% is slightly higher than the payout ratios of other high dividend stocks. However, the payout ratio is substantially lower than the company’s own 94% ratio average over the last five years, which indicated a significant improvement in the right direction. Furthermore, currently above the 50% upper limit generally considered as sustainable for average equities, the current 64% ratio appears high. However, considering that most stocks in the Utilities sector have a payout ratio between 65% and 70%, PPL’s current ratio look much better and indicates that the company should be able to continue boosting its annual dividend income payouts over the near future to maintain its place among high dividend stocks.
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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.