PEG Public Service Enterprise Group Inc

Public Service Enterprise Group (PEG) has increased its dividend by 3.6%, bringing the annualized dividend to $1.42 per share from the previous payout of $1.37 per share. The company’s strong balance sheet and cash flow generating abilities ensure a steady rise to the dividend.

The company will now pay a quarterly dividend of 35.5 cents per share compared with the prior quarterly dividend of 34.25 cents per share. The dividend will be paid on March 31, 2012, to shareholders of record at the close of business on March 9, 2012.

The company has been regularly paying dividends since 1907. The last quarterly dividend increase came in February 2010 with a 3% hike from 33.25 cents to 34.25 cents.

With the current dividend increase, the company revised its payout policy. It had earlier committed to pay 40% to 50% of its earnings as dividends. Now it plans to reward shareholders with a greater percentage of its income.

The company stated that contribution from its stable regulated business is steadily increasing, a trend that is expected to continue. Besides, progress on operational, capital investment and financial goals in 2011 would yield generous free cash flow, supporting future dividend growth.

The company’s robust portfolio of regulated and non-regulated utility assets offers a steady earnings base and significant long-term growth prospects. Moreover, we believe that going forward the company’s growth will be driven by a low-cost nuclear fleet, assumed rate relief and added generating capacities.

However, the increasing cost of coal, higher pension and financial costs, and power-price volatility are areas of concern. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Public Service Enterprise Group is expected to release its earnings tomorrow.  The Zacks Consensus Estimates for fourth quarter and fiscal year 2011 are currently at 46 cents per share and $2.73 per share, respectively.

Recently its competitor, Consolidated Edison Inc. (ED) reported fourth quarter and fiscal 2011 results. In the reported quarter, earnings from continuing operations came in at 74 cents, beating the Zacks Consensus Estimate of 71 cents. Results also compared favorably with earnings from continuing operations of 69 cents in the year-ago quarter.

 
CONSOL EDISON (ED): Free Stock Analysis Report
 
PUBLIC SV ENTRP (PEG): Free Stock Analysis Report
 
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