PPL & Constellation Energy's Dividends Threatened by Rising Costs
February 07 2011 - 8:46AM
Marketwired
Combating rising costs, several companies in the Electric Utilities
Sector issued disappointing 2011 guidance. The poor outlook has led
many investors to question whether key industry players will be
able to maintain their healthy dividends. Stricter environmental
regulations require that any new power plants built that are large
enough to produce 75,000 tons of carbon dioxide a year must use the
best available control technology, which is expected to add
significantly to operational costs. The Bedford Report examines the
outlook for companies in the Electric Utilities Industry and
provides research reports on PPL Corporation (NYSE: PPL) and
Constellation Energy Group, Inc. (NYSE: CEG). Access to the full
company reports can be found at:
www.bedfordreport.com/2011-02-PPL
www.bedfordreport.com/2011-02-CEG
Last Friday, PPL Corporation reported fourth quarter net income
of $355 million or 73 cents per share, compared with $153 million,
or 40 cents per share, a year ago. Revenues for the quarter rose to
$1.86 billion from $1.71 billion a year ago. PPL expects 2011
earnings of $2.40 to $2.60 per share, compared to the Wall Street
estimate of $2.63 a share.
Presently PPL pays an annual dividend of 1.40 for a hefty yield
of around 5.40 percent.
The Bedford Report releases regular market updates on the
Electric Utilities Industry so investors can stay ahead of the
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PPL's industry peer, Constellation Energy, said last week that
its fourth quarter net income stumbled to $159.8 million, or $0.79
per share, compared to earnings of $4.4 billion, or $21.96 per
share, in the same quarter last year. The company pays an annual
dividend of 96 cents for a yield of about 3 percent. According to
its earnings statement, Constellation had $2.03 billion in cash on
hand at the end of the fourth quarter. CEG CEO Mayo A. Shattuck III
said during the earnings call that the company plans to spend much
of its cash acquiring more power plants in areas where the company
has large amounts of customers buying its power.
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