This Stock Blends Utility, Pipeline Dividend Plays

You could call OGE Energy (OGE) an ideal dividend hybrid. The company is the parent of an electric utility and owns part of a pipeline partnership.


The company will report second-quarter results Thursday before the market opens. Analysts who follow the company expect earnings of 57 cents a share and revenue of $592.6 million.

OGE is the parent company of Oklahoma Gas and Electric Co., which serves more than 840,000 customers in Oklahoma and western Arkansas. It generates electricity from coal, natural gas, wind and solar plants and has been shifting its mix to lower-emission sources.

OGE also owns a 25.6% limited partner interest and 50% management stake in Enable Midstream Partners (ENBL) that provides OGE with a source of cash. CenterPoint Energy (CNP) owns the other 50% management stake in Enable Midstream.

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Enable Midstream operates a network of more than 23,000 miles of gathering pipelines, 14 major processing plants and eight storage facilities.

Marriage Of Utility, Pipelines

In a sense, OGE is a marriage of two popular types of dividend-yielding companies: utilities and pipeline limited partnerships. Both are known for being reliable dividend payers.

OGE Energy pays a quarterly dividend of 33.25 cents a share. Calculating it out to an annualized basis, the dividend yield is 3.7%. IBD calculates a moderate dividend growth rate of 4%. OGE’s own plan is to increase the dividend by 10% a year through 2019, and the six-year compounded annual growth rate is nearly 9%.

The company expects the utility business to grow 4% to 6% in the long term as Oklahoma’s economy grows thanks to rising commodity prices.

OGE shares are near 52-week highs after clearing a 35.52 buy point of a cup-with-handle base.


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The post This Stock Blends Utility, Pipeline Dividend Plays appeared first on Investor's Business Daily.

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