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Spire (SR) Rewards Shareholders With 5.4% Dividend Hike

·3-min read

Spire Inc.’s SR board of directors approved a dividend hike of 5.4%, totaling the new annual dividend to $2.74 per share. The quarterly dividend of 68.5 cents per share will be payable on Jan 4, 2022, to shareholders on record as on Dec 10, 2021.

The new dividend yield is 4.3% compared with the S&P 500 composite’s 1.3% average.

Can This Dividend be Sustained?

Spire has a long history of dividend payments and has been paying out dividends consistently for the past 77 years, with the current hike in annual dividend for fiscal 2022 marking the 19th consecutive year of increase. SR’s dividend hike is in line with its target payout ratio of 55-65%.

Spire anticipates investing $590 million in fiscal 2021 and more than $3 billion during the fiscal 2021-2025 time period. These investments will increase the reliability of gas services and enable Spire to efficiently meet higher demand from an increasing customer base, effectively.

Spire expects this systematic investment to drive 7-8% rate base growth over the long term and is able to recover more than 80% of spending with minimal lag, which continues to boost performance.

Spire’s net cash provided by operating activities in the first nine months of fiscal 2021 amounted to $220.7 million. Strong cash flows and systematic investment boost earnings and facilitate the consistent payment of dividends and increase the rate annually.

Dividend Hikes in Utility Space

Along with Spire, other gas utilities are also boosting shareholder’s value via dividends, like Sempra Energy SRE, UGI Corp. UGI and ONE Gas, Inc. OGS. While Sempra Energy is carrying a Zacks Rank#3 (Hold) at present, UGI Corp. and ONE Gas hold a Zacks Rank#2 (Buy).

Sempra Energy hiked dividend by 5.2% in February 2021, which marked the 11th consecutive year of increase. SRE targets a 50-60% dividend payout ratio, going ahead. Such efforts to maximize shareholders’ value through regular dividends will likely boost investors’ interest in the stock.

In May 2021, UGI Corp.’s board of directors approved an increase in the quarterly dividend rate to 34.5 cents per share or $1.38 on an annual basis, up 4.5% from the previous quarterly rate of 33 cents per share. This marks UGI’s 137th consecutive year of dividend payment and 34th consecutive year of annual dividend raise.

ONE Gas has been raising its annual dividend for the past few years. The annual dividend of $2.32 per share for 2021 reflects an increase of 38.1% from the 2017 level and 7.4% from 2020. OGS aims to increase the annual dividend by 6-8% in the 2020-2025 time period, on an average, subject to approval from the board.

Zacks Rank & Price Performance

In the past month, this Zacks Rank #3 stock has inched up 0.8% against the industry’s fall of 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

One Months’ Price Performance

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Sempra Energy (SRE) : Free Stock Analysis Report

UGI Corporation (UGI) : Free Stock Analysis Report

Spire Inc. (SR) : Free Stock Analysis Report

ONE Gas, Inc. (OGS) : Free Stock Analysis Report

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