In order to share more profits with its shareholders, the board of directors of energy utility TECO Energy (TE) increased the quarterly dividend to 21.5 cents per share from the existing level of 20.5 cents. This new quarterly dividend will be paid to shareholders in the remaining three quarters of 2011, subject to declaration by the board.
Following the dividend increase, the annualized dividend of TECO Energy will now total 85 cents per share, a 3.7% growth from the preceding annualized payout of 82 cents. The company had earlier increased the dividend rate by 2.4% in 2010.
Teco Energy’s cash balance, as of December 31, 2010, was $67.5 million versus $46 million as of December 31, 2009. In 2010, the company used $174.7 million for dividend payments. Considering the same level of shares outstanding from December 31, 2010, the company would require an incremental $2 million per quarter to meet the increased dividend rate.
TECO Energy’s fourth quarter and fiscal 2010 earnings per share of 23 cents and $1.28 came in below the respective Zacks Consensus Estimates. The fourth quarter and fiscal 2010 earnings per share of its closest peer NextEra Energy Inc. (NEE) also lagged the Zacks Consensus Estimates.
The company expects earnings per share for 2011 to range between $1.25 and $1.40. The Zacks Consensus Estimates for the first quarter 2011, fiscal year 2011 and fiscal year 2012 currently stand at 33 cents per share, $1.36 per share and $1.53 per share, respectively.
We appreciate TECO Energy’s commitment to consistently return value to shareholders via dividend payments. Besides, the targeted payout ratio of 60% to 70% is also quite attractive.
TECO Energy currently retains a Zacks #3 Rank (short-term Hold rating). We provide a long-term Neutral rating on the stock.
Based in Tampa, Florida, TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electric energy in Florida.
NEXTERA ENERGY (NEE): Free Stock Analysis Report
TECO ENERGY (TE): Free Stock Analysis Report
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