Cleco Corp Hikes Dividend Rate - Analyst Blog

The board of directors of Cleco Corporation CNL boosted its quarterly dividend rate by 10.3% to 40 cents per share from 36.25 cents per share, bringing the annualized payout to $1.60 per share.

Management now expects a dividend payout ratio of 55% to 65% versus an earlier expectation of 50% to 60%. The revised annualized dividend yield of the company comes to 3.15%, higher than the industry yield of 2.11%.

A steady dividend payout policy reflects Cleco's healthy financial position and balanced capital deployment approach. Cleco ended 2013 with cash flow from operating activities of $341.7 million, up 29.9% from the year-ago level.

The company ended 2013 with earnings of $2.53 per share, up 2.8% from the prior year. The upside was driven by increased industrial and wholesale sales plus the favorable impact of a severe winter in the latter part of the year.

Looking forward, the company is optimistic about its 2014 bottom-line performance as it recently received its final approval to join the multiregional transmission organization, Midcontinent Independent System Operator, Inc. (MISO). The integration will provide Cleco opportunities for transmission growth as well as open more avenues for the wholesale market.

MISO creates new efficiencies that will help Cleco to deliver power in a more economical way benefiting its customers through improved reliability. The company's continuous investments in growth projects will allow it to generate adequate funds for consistent distribution of cash among its shareholders.

Cleco Corporation has a Zacks Rank #4 (Sell). Other better-ranked players in the industry include CPFL Energia S.A. CPL, Entergy Corp. ETR and Korea Electric Power Corp. KEP. All of these stocks carry a Zacks Rank #1 (Strong Buy).