News

Duke Energy Corporation DUK recently announced that its board of directors has approved a hike in its quarterly dividend to $1.025 per share, reflecting an increase of 2% from the prior payout.

With the current hike, the company will now pay out an annual dividend of $4.10 per share. This represents an annual dividend yield of 4.47% based on its share price worth $91.78 as of Jul 17, 2023. DUK’s current annualized dividend yield is more than the industry’s yield of 3.59% as well as the Zacks S&P 500 composite’s yield of 1.41%.

This signifies Duke Energy’s strength in the business to generate enough cash flow to reward shareholders with improved dividend payouts.

Will Duke Energy Sustain Dividend Hikes?

Dividend hikes are backed by a company’s financial strength and ability to generate enough cash to reward shareholders with impressive returns. Duke Energy had cash & cash equivalents of $451 million as of Mar 31, 2023, up from $409 million on Dec 31, 2022.

In the days ahead, the company expects to generate adjusted EPS in the range of $5.55-$5.75 in 2023, which implies growth of nearly 7.2% at the midpoint from the prior-year reported figure. DUK also projects the long-term EPS growth rate in the range of 5-7% through 2027, which reinforces Duke Energy’s financial prowess through strong earnings and its ability for enhanced dividend disbursements.

A company’s planned capital expenditure to improve the business outcome and enhance operational efficiency assists the company in generating healthy returns. In this regard, Duke Energy currently anticipates spending capital worth $145 billion over the next decade, which should amplify its business strength and improve its earnings. This should enable DUK to sustain dividend hikes, like the latest one.

Peer Moves

Buoyed by the essential nature of business, utilities generally feature stable and predictable cash flows, which allow them to boost shareholders’ worth through dividend hikes. Apart from Duke Energy, utilities that may attract income-seeking investors looking for consistent and reliable returns are as follows:

In February 2023, CMS Energy Corporation CMS approved a hike in its quarterly dividend to 48.75 cents per share, reflecting an increase of 6% from the prior payout.

CMS Energy boasts a long-term earnings growth rate of 7.8%. Shares of CMS Energy have delivered 6.2% in the past three months.

In December 2022, PNM Resources PNM increased the company's annual dividend payout by $0.08, which is a 5.8% increase. This represents an annual dividend rate of $1.47 per share of the common stock.

PNM has a long-term earnings growth rate of 4.5%. The Zacks Consensus Estimate for 2023 earnings calls for a growth rate of 21.8% from the prior-year reported figure.

In October 2022, American Electric Power AEP increased its quarterly cash dividend by 5 cents per share to 83 cents per share. This was the company's 450th consecutive quarterly cash dividend.

AEP’s long-term earnings growth rate is projected at 5.6%. The estimated figure for American Power’s 2023 earnings suggests a growth rate of 3.3% from the prior-year reported figure.

In the past year, shares of Duke Energy have dropped 13% compared with the industry’s decline of 5%.

Image Source: Zacks Investment Research

Zacks Rank

Duke Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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