Wisconsin Energy Plans Stock Split - Analyst Blog

Diversified energy utility Wisconsin Energy Corporation (WEC) said that the company's shareholders will receive one additional share for each Wisconsin Energy share held by them, under a two-for-one stock split. The company also announced a new quarterly cash dividend rate consistent with the board's policy that was adopted at the December 2010 meeting.

Wisconsin Energy currently pays a quarterly dividend of 40 cents per share, which sums to an annualized dividend of $1.60 per share.

Wisconsin Energy said that a new quarterly dividend of 52 cents per share will be paid to shareholders prior to the announced stock split. Post-split, the company will pay shareholders a quarterly dividend of 26 cents per share.

Wisconsin Energy announced February 14, 2011, as the record date for the cash dividend and also for its first stock split since 1992. The company also said that the dividend and additional shares will be distributed to eligible shareholders starting from March 1, 2011.

Wisconsin Energy attributes the said actions to long-term performance of the company in delivering value to its customers and stockholders.

Shares of Wisconsin Energy closed at $59.36 per share on Thursday. The two-for-one stock split depicts the company's desire to keep the market price for its shares at attractive levels that cater to the investment criterion of a broad range of institutional and individual investors.

Wisconsin Energy is a diversified energy company engaged in generation and distribution of electricity in the southeastern, east central, and northern Wisconsin, as well as Michigan.

The company also distributes natural gas; and owns, develops, and operates hydro, coal, nuclear, and wind electricity generating facilities, and also invests in other energy-related entities. It also develops and invests in real estate. The primary competitors of Wisconsin Energy are Progress Energy Inc. (PGN) and Xcel Energy Inc. (XEL).

Wisconsin Energy has continued to maintain a well-managed balance sheet over a period of time. With new units entering commercial operation, we expect the company's earnings and cash flow to grow going forward. This will in turn help the company to further strengthen its balance sheet and effectively fund its planned capital expenditures.

In all, we believe Wisconsin Energy is well positioned to benefit from its strong and highly-visible near-term growth outlook, constructive regulatory environment and a solid financial position.

This along with the company's new dividend policy is going to attract investor attention, in our view. However, driven by soft retail electricity demand and uncertainty over regulation, we believe continued weak sales will weigh on earnings in the near term.

Wisconsin Energy currently has a short term Zacks #4 Rank (Sell). However, we maintain our long term Neutral rating on Wisconsin Energy.