The board of directors of DTE Energy Company (DTE – Free Report) approved a 7% increase in its quarterly dividend rate. The revised dividend of 88.25 cents per share will be distributed on Jan 15, 2018, to shareholders of record at the close of business on Dec18, 2017.
The hike in dividend marks an increase of 5.75 cents per share from the previous dividend of 82.50 cents per share and reflects management’s confidence in its long-term growth plans. The new annualized dividend amounts to $3.53, up from $3.30 distributed earlier.
With the current dividend hike, DTE Energy’s new dividend yield stands at 3.18%, much higher as compared to the industry’s average dividend yield of 2.96%, reflecting the board’s commitment toward delivering above-average shareholder returns. The company has paid quarterly cash dividends for more than 100 years now.
Additionally, it revealed plans of maintaining annual dividend hike of approximately 7% through 2020 — higher than the 6% average dividend increase in the past six years.
Dividend Hike Attracts Investors
As investors are always on the lookout for companies with a track record of consistent and incremental dividend payments, regular dividend hikes reflects the company’s solid business strategy of ensuring steady earnings, which in turn encourages them to invest in the stock.
In the first nine months of 2017, the company had returned $495 million to its shareholders through dividend and share buyback compared with $426 million in the year ago period. The hike in dividend will further increase the total payout compared to the last year.
DTE Energy’s capacity to generate cash flows, strong balance sheet and initiatives to achieve its long term earnings goal is helping the management to come out annual dividend increase in the past few years.
Our View
DTE Energy has a well-planned capital expenditure program, which will result in incremental earnings from its regulated operation, paving the way for higher dividend. Toward this, it plans to invest $6.5 billion over the next 10 years for maintaining the reliability of its electric utility grid. Apart from utility, it also continues to make steady progress on its non-utility business, which provides diversity to earnings stream.
