PPL Corporation Offers 5.3% Dividend Yield, Boost Annual Dividend Payout Nearly Two Decades (PPL)
By: Ned Piplovic,
The PPL Corporation (NYSE:PPL) – a electricity distribution utility company – offers its shareholders currently a 5.3% dividend yield, and the company has hiked its annual dividend payout for the past 19 consecutive years.
During the growth market over the past couple of years, many investors have divested away from utility stocks into faster-growing technology and financial stocks. However, the recent market pullback and volatility makes utility stocks attractive again. The share prices of many utility stocks declined in early 2018. However, those share price pullbacks might be an opportunity to take a long position in a utility stock – especially in a company like the PPL Corporation that offers an above-average dividend yield with a steady annual payment growth history. The steady flow of dividend distributions allows investors in the PPL stock to collect significant dividend income while waiting on the share price to recover fully.
PPL’s share price declined more than 30% between the beginning of the trailing 12 months and its 52-week low in June 2018. However, the share price has recovered almost half of its losses since the June low. Furthermore, the share price’s 50-day moving average (MA) crossed above the 200-day MA in a bullish manner in mid-September 2018 and has continued to widen the gap. Additionally, the share price rose above both moving averages at the beginning of October and has remained above both averages, except for one trading session in late October 2018.
Investors who do their own analysis and conclude that the share price might continue its current uptrend, should consider taking a long position in the PPL stock. To take advantage of the above-average dividend payout streak and claim eligibility for the pay date on January 2, 2019, investors must buy shares prior to the December 7, 2018, ex-dividend date.
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 to more than 10 million customers 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 September 2018, 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. For fiscal 2017, the company generated $1.13 billion in net income on $7.5 billion of operating revenues. For the third quarter of 2018, the company delivered earnings per share of $0.59, which was 5% higher than the $0.56 amount from the same period last year. Based on the positive results through the third quarter of 2018, the company revised its earnings estimate for the entire year from $2.33 to $2.35. 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 U.S.
After the 30% decline since the onset of the trailing 12-month period, the share price reached its 52-week low of $25.61 on June 7, 2017, before reversing direction. Since bottoming out in early June 2018. The share price recovered nearly half of those losses and closed on November 28, 2018 at $30.84. While this closing price was still nearly 16% below its peak from one year earlier, it was 20.4% higher than the June low.
PPL’s current $0.41 quarterly dividend payout is 3.8% higher than the $0.395 amount from the same period last year. This new quarterly dividend corresponds to a $1.64 annual dividend payout and a 5.3% forward dividend yield, which is 6.4% higher than the company’s own 5.0% average yield over the past five years.
In addition to outperforming its own dividend yield average over the past five years, the company’s current 5.3% yield is 125% above the 2.36% average dividend yield of the entire Utilities sector. Furthermore, PPL’s current dividend yield is also nearly double the 2.67% simple average yield of the Electric Utilities industry segment, as well as 27.5% higher than the 4.17% average yield of the segment’s only dividend paying companies.
Over the past 19 years of consecutive annual hikes, PPL enhanced its total annual dividend payout nearly 230%, which is equivalent to an average growth rate of 6.5% per year.
The strong dividend payout over the past year offset some of the 16% share price decline to limit the total loss to less than 10% for the trailing 12 months. However, the long-term shareholders enjoyed a 7% total return over the past three years and a total return of nearly 36% over the past five years.
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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.