Published on 3 Dec 2021 on Zacks via Yahoo Finance

WEC Energy (WEC) to Reward Shareholders Via 7.4% Dividend Hike

The board of directors of WEC Energy Group WEC is planning to raise the first-quarter 2022 dividend to 72.75 cents per share, marking a hike of 7.4% and totaling the annual figure to $2.91 per share from $2.71. This is in line with its targeted payout ratio of 65-70% of earnings.The new dividend will be declared in the scheduled meeting in January and will be payable Mar 1, 2022, to WEC Energy’s stockholders of record on Feb 14, 2022. If approved, the new dividend yield will be 3.27% compared with the S&P 500 composite’s 1.41% average.Concurrent to the dividend hike, WEC initiated the 2022 earnings guidance in the range of $4.29-$4.33 per share. The midpoint of the range, $4.31 per share, indicates growth of 7.5% from the midpoint of WEC Energy’s initial guidance for 2021. Also, it is marginally higher than the Zacks Consensus Estimate of $4.29.

Can This Dividend be Sustained?

WEC Energy consistently hiked dividends for the last 12 years.WEC plans to grow dividends in the band of 6-7% annually, subject to approvals of the board of directors.WEC’s net cash provided by operating activities in the first nine months of 2021 was $2,006.7 million compared with $1,949.7 million in the comparable period of 2020.This outperformance was led by higher revenues owing to operational efficiency and the reopening of economic activities.WEC Energy is making efforts to grow both organically and inorganically, which are boosting its performance as well as cash flow. At the third-quarter end, WEC had an additional 8,000 electric and 15,000 natural gas customers from the respective year-ago quarter’s reported figures.WEC continues to invest in cost-effective zero-carbon generation and plans to spend $17.7 billion in the 2022-2026 time frame.This systematic investment to strengthen operations and rate revision will provide enough funds to sustain its dividend payment routine.