Zacks_Analysts' Blog : Xcel Energy Raises Dividend - Analyst Blog

Xcel Energy Inc. (XEL) announced a 3.1% increment in its quarterly common dividend on May 19, 2010, which is a part of its commitment to raise the shareholder value. Xcel will now pay a quarterly dividend of 25.25 cents per share, up from 24.50 cents paid on April 20, 2010. The increased dividend will be paid on July 20, 2010, to shareholders of record as of June 24, 2010.

 

Xcel Energy also declared dividends on all series of outstanding preferred stock, which will be paid on July 15, 2010, to shareholders of record on June 24, 2010.

 

Xcel Energy has been consistently paying dividends to its shareholders and has a long-term policy to increase the dividend annually by 2% to 4%. The current year’s increment in the dividend rate represents the company’s eighth straight year of a dividend increase. The yearly increase in dividend, even in the context of a declining economy, reflects the financial strength of the company.

 

The cash and cash equivalents of Xcel Energy at the end of the first-quarter 2010 was $11.8 million, higher than $7.4 million at the end of the fourth-quarter 2009. The long-term debts of the company at the end of the first-quarter 2010 were $897.5 million, lower than $922.4 million at the end of the fourth-quarter 2009. It shows that the company is not only paying dividends but also reducing the debt burden and generating cash flow.

 

Xcel Energy’s persistent increase in the dividend rate for the last eight years is unmatched when compared with its peers Allete Inc. (ALE) and CenterPoint Energy Inc (CNP). The dividend yield of Xcel for the fourth quarter 2009 was 4.6% higher than the Zacks industry average of 3.5%.

 

Based in Minneapolis, Minnesota, Xcel Energy is a U.S. electricity and natural gas company, with operations in eight Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.4 million electricity customers and 1.9 million natural gas customers through its regulated operating companies.

 

Our view

 

We appreciate Xcel Energy’s move to improve shareholder value. We, however, retain our neutral outlook on the stock until a more positive catalyst spurs the value of the shares higher.