Tag Archives: TECO

Business, Finance, Occupation & Industry

Can Dead Dividends Deliver Growth?

Leave a comment

By Justin Loiseau, The Motley Fool

Filed under:

On Feb. 26, Atlantic Power did something responsible: It slashed its dividend by 66% in the name of long-term value creation. But the aftermath of its actions shows that dividend haircuts don’t always look good. Let’s dig deeper into Atlantic’s decision, peek into the past for some much-needed perspective, and check out the new look of another company that recently received a dividend haircut.

Dawn of the dead dividend
As part of Atlantic’s Q4 2012 earnings report, CEO Barry Welch noted that the utility’s board decided that “it was in the best interest of the company and its shareholders to establish a lower and more sustainable Payout Ratio that balances yield and growth and is at the same time consistent with our outlook for current and prospective projects under a range of scenarios.”

In real numbers, this announcement represented a 66% drop in the company’s monthly payouts, a move that would’ve devastated the utility’s 10.2% dividend yield – if not for its share price plummet.

Source: AT data by YCharts. 

But the cause for Atlantic’s crash didn’t come from its dividend cut. Since its announcement, three law firms have filed class action lawsuits against Atlantic for intentionally misleading investors about its current cash flow and the impending deadlines of key contracts. If the allegations turn out to be true, Atlantic’s dividend cut did nothing more than reveal an inevitable bald spot in the company’s receding hairline.

Look into the past…
Dividend cuts happen. This Friday, TECO Energy will celebrate the 10th anniversary of the day it dropped its dividend 46% to balance its books and refocus on its core businesses.

CEO Robert Fagan’s carefully chosen words during the announcement hint at what he was sure would amount to Wall Street suicide: “We recognize the greatest impact will be on our retail shareholders. However, we believe that it will be in their interests longer-term… This level of dividend positions TECO Energy to return to… long-term dividend growth when conditions improve.” But since that fateful day, TECO‘s stock has stepped up a respectable 66% alongside its growing dividend.

Source: TE data by YCharts. 

Beware the “Stairmaster”
Companies must decide for themselves whether dividends are the best method to return value to shareholders. Although it’s never inherently a bad idea to boost dividends, investors should beware the “Stairmaster.” A dividend stock that flexes its financial muscles quarter after quarter may not be using its resources intelligently. Step after step, Southern Company and Xcel Energy have pushed their dividends higher through the worst of the Great Recession.

Source: SO Dividend data by YCharts. 

Atlantic, why can’t you be more like Exelon?
Atlantic wasn’t the only utility to dice up its dividend this past quarter. Exelon announced on Feb. 7 that it would slash its dividend by a whopping 40%. But unlike Atlantic, Exelon’s stock has risen 12% since its earnings report. That’s 4.5 percentage …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

This Week in Utilities: Wind Sales, Explosions, and More

Leave a comment

By Justin Loiseau, The Motley Fool

Filed under:

From a $1.5 billion wind sale to an unexpected explosion, it’s been a busy week for utilities. Here’s what you need to know to stay current on your dividend portfolio’s profits.

BP winds down wind
BP announced this week that it plans to sell off its $1.5 billion worth of wind farms in an effort to further specialize on high-margin oil production and exploration. The move comes as part of the corporation’s larger $38 billion garage sale and is meant to streamline operations and improve efficiencies as the company downsizes.

No buyers have been announced for the corporation’s 16 wind farms, but potential buyers include NextEra Energy , Exelon , or Atlantic Power . All three utilities have added on wind recently, and as companies continue to specialize in specific energies, more wind could help to boost margins.

Wind comprised 56% of NextEra’s generation capacity in 2012, while Exelon spent $650 million in capex last year to add on to its 44 wind projects. Atlantic recently announced that it will focus on natural gas and renewables in the future, and the utility’s 2012 acquisition of Ridgeline Energy added three wind farms to its energy portfolio.

NextEra upgraded to “buy”
The nation’s largest renewable-energy producer got a boost from Goldman’s green light this week. In a report published Wednesday, Goldman Sachs analyst Michael Lapides upgraded NextEra to a buy based on its sustainable dividend growth, above-average EPS, improving cash flow, healthy regulatory environment, and renewable growth opportunity.

The utility’s stock has outperformed both the S&P 500 and the Dow Jones U.S. Utilities Index over the past year, and it has popped up an additional 1.5% since Lapides’ report.

NEE data by YCharts.

 

Southern explosion
An explosion shut down one of Southern‘s largest coal-fired generation plants on Thursday. According to the utility, the explosion occurred during a routine maintenance outage. No employees were hurt, but the cause of the explosion remains unknown and the 3,160 MW plant remains out of commission.

The plant represents 7.3% of the utility’s total capacity, but Southern stressed that services to its Georgia customers will continue uninterrupted.

TECO files for rate increase
TECO‘s Tampa Electric filed a formal request with the Public Service Commission to raise rates by 10% in 2014. Its last request came in 2008, and, according to TECO, its new ask would keep rates 5% below national levels for its Florida customers.

The move comes as part of TECO‘s plans to raise an extra $135 million to cover rising energy costs. The Public Service Commission is expected to consider TECO‘s ask later this year, with a final decision delivered by the end of 2013.

As the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. This strength, combined with an increased focus on balance sheet health and its recent merger with Constellation, places Exelon and its resized dividend …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

TECO Files For 10% Rate Increase

Leave a comment

By Justin Loiseau, The Motley Fool

Filed under:

TECO Energy announced today that its regulated Tampa Electric subsidiary has filed a formal request to increase rates by 10% starting in 2014. TECO first announced its intentions in February, when the company stated that it would seek a total increase of approximately $135 million to cover rising costs.

According to the utility, this new rate hike would translate to approximately $10.41 in additional charges for individual customers, and a 6% bump for commercial and industrial clients.

Tampa Electric President Gordon Gillette said in a statement today:

It is important to remember that while the cost of nearly everything has gone up in recent years, Tampa Electric bills have gone down. We empathize with our customers who also are feeling the effects of a difficult economy. There is never a good time to raise rates, but even with this increase, Tampa Electric bills would remain among the lowest in Florida.

Tampa Electric last requested a rate increase in 2008. According to TECO, its new rate would translate to an overall charge 5% below the national average (and cheaper than six years ago). The Public Service Commission is expected to deliver its verdict by the end of 2013.

The article TECO Files For 10% Rate Increase originally appeared on Fool.com.



Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter @TMFJLo and on Motley Fool CAPS @TMFJLo.















…read more

Source: FULL ARTICLE at DailyFinance