CMS Energy Raises Dividend - Analyst Blog

CMS Energy (CMS) has raised the quarterly dividend on its common stock by 20% to 15 cents per share, up from 12.5 cents per share. This action has increased the annualized dividend from 50 cents to 60 cents. The first incremental quarterly dividend for the common stock is payable on February 26, 2010, to shareholders of record as of February 8, 2010.
 
CMS Energy has a strong balance sheet among its peers with a low debt-to-capitalization of 70.4% (Zacks industry average was 79.3%) for the first nine months of fiscal 2009. The company continues to be a strong cash generator with an annual operating cash flow of approximately $559 million during fiscal 2008. CMS Energy had $980 million of liquidity, including $797 million under secured credit facilities, and $183 million in cash and cash equivalents as of September 30, 2009.
 
CMS Energy plans to spend $6.3 billion between 2009 and 2013 on base capital investments. This includes maintenance capital expenditures and environmental upgrades, construction of an 830 MW clean coal plant, investments to meet renewable energy regulations and automated metering infrastructure.
 
CMS Energy Corporation is a diversified energy company operating in the United States and around the world. The company's two principal subsidiaries are Consumers Energy Company and CMS Enterprises Company. Consumers Energy Company is a public utility that provides natural gas or electricity to residents in Michigan's Lower Peninsula. CMS Enterprises Company, through its subsidiaries, is engaged in several domestic and international diversified energy businesses.
 
Going forward, stable regulated utility operations, beneficial regulatory policies in Michigan, higher rates, strong balance sheet, incremental dividend and a relatively cheap earnings-based valuation support our bullish outlook for CMS Energy. CMS Energy has reaffirmed its adjusted EPS guidance of $1.25 for fiscal 2009. This is a cent higher than the Zacks Consensus Estimate of $1.24 per share for fiscal 2009. The company is slated to release its fiscal 2009 results in the first half of March.
 
Based on the forward earnings estimates, CMS Energy is trading at a discount to its peers such as Calpine Corporation (CPN), Nisource Inc. (NI) and Empresa Nacional de Electricidad S.A. (EOC). However, the present unfavorable macro backdrop, lower demand for electricity, the dismal Michigan economy and pending regulatory cases continue to restrain valuation. We maintain our market Neutral recommendation on the Zacks #3 Rank ('Hold') stock.
Read the full analyst report on "CMS"
Read the full analyst report on "CPN"
Read the full analyst report on "NI"
Read the full analyst report on "EOC"
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