Tags: Ameren | utility | dividend | AEE

Ameren: A Solid Utility Stock Dividend

By    |   Monday, 05 Dec 2011 01:54 PM

Public utility company Ameren (AEE) provides its customers with some of the lowest electric and gas rates in the country. However, the company is profitable and the solid dividend should be attractive to utility stock investors.

Ameren divides its business into two public utilities — Ameren Illinois and Ameren Missouri — providing both electric and gas utility service to customers in these areas. The company also has wholesale electricity generation revenues under Ameren Energy Resources. Approximately 90 percent of Ameren's net earnings are generated from the public utilities. The wholesale generation business chips in the balance.

For the first nine months of 2011, total company revenues remained nearly level, $5.95 billion, up from $5.93 billion. Net income from core operations for the period was $2.42 per share, down from $2.53.

Results for the heavy power use third quarter were better. Net income for the quarter of $1.57 was up from $1.40 a year earlier and well above the Wall Street consensus estimate of $1.29. In the third quarter earnings release, management increased the full year earnings guidance by 20 cents per share to a range of between $2.50 and $2.60.

Steady dividend

For the December 2011 quarterly dividend, the Ameren board of directors increased the dividend to 40 cents per share from the previous 38.5 cents. The payout had been at the previous level for 11 consecutive quarters. At under $32 per share, AEE provides a dividend yield of about 5 percent.

The greatest possible negative for this company is increased costs due to environmental regulations affecting coal-fired power generation. Ameren Energy Resources generates 98 percent of its electricity from coal fired plants. Proposed EPA regulations could have a severe, negative financial impact on this type of electrical power production.

Since the third quarter earnings report, the analysts at Goldman Sachs have upgraded their rating on Ameren to neutral from sell. The UBS analysts reiterated their neutral rating and increased their target price by $3 per share.

The company next reports on Feb. 22.

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Public utility company Ameren (AEE) provides its customers with some of the lowest electric and gas rates in the country. However, the company is profitable and the solid dividend should be attractive to utility stock investors. Ameren divides its business into two public...
Ameren,utility,dividend,AEE
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2011-54-05
Monday, 05 Dec 2011 01:54 PM
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