CenterPoint Energy Inc. (CNP) raised quarterly dividend on its common stock by 2.6% to 19.5 cents from 19 cents per share. The dividend is payable on Mar 10, 2010, to shareholders of record as on Feb 16, 2010. This is CenterPoint Energy’s fifth consecutive yearly hike in its common stock dividend.
CenterPoint Energy’s stable and regulated electric power operations and gas distribution utilities generate a relatively stable and growing earnings stream. This is complimented by its expanding pipeline network, expansion of pipeline capacity, rate base growth and gas well connections.
CenterPoint Energy plans to spend $4.1 billion in the next four years (2010 – 2013) focusing mainly on upgrading its electricity and natural gas distribution system and generating assets through projects like the advanced metering system. The company is also tapping federal funds. In Aug 2009, it filed an application with the Department of Energy for $200 million in Federal Stimulus Funds available under the American Recovery and Reinvestment Act of 2009. The funds would mainly be utilized to accelerate the implementation of its advance metering system, and support its intelligent grid initiative.
However, CenterPoint Energy’s balance sheet remains stretched, with the debt-to-capitalization ratio at a high 77.3% after the end of the first nine months of fiscal 2009.
CenterPoint Energy is a domestic energy delivery company that includes electricity transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations. They serve customers in Arkansas , Illinois , Iowa , Kansas , Louisiana , Minnesota , Mississippi , Missouri , Oklahoma , Texas and Wisconsin .
CenterPoint Energy will release its fiscal 2009 numbers on Feb 26, 2010. The company expects its fiscal 2009 earnings in the range $1.05 – $1.15 per share. This is in line with the Zacks Consensus EPS Estimate of $1.09.
CenterPoint Energy at present is trading at a discount based on forward earnings estimates, compared to its peers like Integrys Energy Group, Inc. (TEG), Pepco Holdings, Inc. (POM), NRG Energy, Inc. (NRG) and PPL Corporation (PPL). Our bullishness on the company is partially offset by pending regulatory cases, tepid economy, lower demand for electricity, falling wholesale natural gas prices, and a significant presence in the hurricane prone area of the U.S. Thus, we maintain our Neutral recommendation on the stock.
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