Portland General Electric Hikes Dividend 12 Consecutive Years (POR)
By: Ned Piplovic,
The Portland General Electric Company (NYSE: POR) boasts 12 consecutive years of annual dividend hikes and currently offers a 3.5% dividend yield.
In addition to raising annual dividend payouts for more than a decade, Portland General Electric managed to grow its share price more than 170% between 2010 and the end of 2017. However, due to fears of accelerated economic growth and rising interest rates, the company’s share price experienced a double-digit-percentage loss in 2018. As a result, Portland’s yield rose above the company’s five-year average yield.
Fortunately for investors, the company’s dividend fundamentals remain strong, and annual dividend payouts are likely to continue to increase. In addition, Portland’s yield may very well continue to outperform the average yield of the Electric Utilities market segment.
Portland General Electric will distribute its next dividend payout on April 16, 2018, to all its shareholders of record prior to the ex-dividend date of March 23, 2018.
Portland General Electric Company (NYSE:POR)
Portland General Electric Company is an integrated electric utility company that engages in the generation, wholesale purchase, transmission, distribution and retail sale of electricity in the state of Oregon. The company operates seven thermal plants, seven hydroelectric plants and two wind farms. Portland General generates a quarter of its power from natural gas and 11% from renewable sources like wind and solar. In addition, the company owns an electric transmission system of more than 1,200 circuit miles for medium- and high-voltage power, as well as more than 27,000 miles of end-user, standard voltage distribution lines. The company is headquartered in Portland, Oregon and has been serving residential, commercial and industrial customers since its foundation in 1930.
Portland’s share price rose with moderate volatility for nearly a decade before peaking in mid-November 2017. In the trailing 12 months (TTM), POR’s share price rose more than 10% before hitting its $50.11 all-time high on November 15, 2017. After falling off due to market volatility, high economic growth and rising interest rates, the share price hovered just above the $40 level in February 2018 before closing on March 6, 2018 at a new 52-week low of $39.40, which was 12.2% lower than it was one year earlier.
With a yield of 3.5%, the income from last year’s dividend payouts was not enough to compensate for a double-digit-percentage share price drop. As a result, Portland delivered a 7% total loss for the preceding 12 months. The longer-term performance was slightly better, as shareholders achieved a total return of more than 21% over the past three years and a total return of 54% over the past five years.
Of course, the positive news is that Portland has been providing rising dividend income for more than a decade and should continue to do so. The company’s current quarterly dividend of $0.34 is 6.3% higher than it was in the same period last year. This current quarterly amount converts to a $1.36 annualized payout for 2018, or a current yield of 3.5%, which is 11.3% higher than the company’s own 3.1% average yield over the past five years. Portland’s current yield is on par with the the average yield of the entire Utilities sector and 43% above the 2.4% simple average yield of all the company’s peers in the Electric Utilities segment.
Portland General Electric has hiked its annual dividend every year since it started paying dividends in 2006. Over the past 12 years, the company has grown its annual dividend at an average rate of 3.5% per year and has enhanced its total annual distribution amount by more than 50% since first starting to pay dividends.
The expanding U.S. economy and concerns over the upcoming interest rate hikes drove some investors away from utility stocks and into fixed-income investments, which become more attractive as interest rates rise. However, the sell-off of utility stocks over the past three months should have cleared out all investors that were using utility stocks as defensive positions because of low interest rates. Therefore, while utilities, such as Portland General Electric Company, might not be fitting for investors seeking high asset appreciation, investors that seek steady dividend income could find that this stock is a good fit for their portfolio.
The company’s current 59% payout ratio — which is lower than its own 61% five-year average dividend payout ratio — is in the sustainable range and indicates that Portland should be able to support rising dividend payouts in the near term.
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