Diversified utility NiSource Inc. (NI) announced that its board of directors has approved an increase in the quarterly dividend rate by a penny. The revised quarterly dividend will be 24 cents payable on August 20, 2012, to shareholders of record at the close of business on July 31, 2012.
The new annualized dividend rate of the company will be 96 cents reflecting growth of 4.3% from the prior annual dividend rate of 92 cents. The increase in the distributable income speaks of the company’s successfully executed investment growth strategy.
NiSource is working consistently to develop its infrastructure and to provide better services to its customers. The initiatives taken by NiSource are yielding positive results. The company registered a marginal year-over-year growth in the customer count during the first quarter of 2012.
The company continues to pursue infrastructural investment and modernization programs. In 2012, the company plans to invest $1.4 billion in growth projects. The company is also working on a system modernization plan, which might involve investment of $4 billion over a 10 to 15 year timeframe.
NiSource is a strong cash flow generator. NiSource’s net cash flow from operating activities in the first quarter of 2012 was $480 million, with $65.1 million used for dividend payouts.
We appreciate the initiatives taken by the company to increase shareholder value. The company is targeting a dividend payout in the band of 60% to 70% of net operating earnings per share. We believe NiSource is on the right track to achieve the targeted payout on the back of healthy cash generation and upgrade programs.
NiSource presently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Another utility operator in the region Dominion Resources Inc. (D) announced a quarterly dividend of 52.75 cents per share, payable on June 20, 2012, to shareholders of record as of June 1, 2012.
Merrillville, Indiana-based NiSource is an energy holding company whose subsidiaries provide natural gas, electricity and other products and services in the U.S. Its operating companies provide energy to 3.8 million customers located within the high-demand energy region stretching from the Gulf Coast through the Midwest to New England.
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