Published on May 15th, 2017 | by itadmin
Dividends Doubled at AES Corp.
AES Corp recently doubled their dividends from $0.05 to $0.1, which is quite a major increase for the electric power generator. Compared to other in its sector, the company is not a very large setup. It generates almost 36,000 megawatts of power throughout the US and in another 19 countries. It also operates another nine distribution companies all over the globe. It might appear as if it has a large presence, but compared to other companies in the sector, it’s relatively small.
When the company announced the increase, the CFO also said that further sums were being allocated to pay dividends to ensure that shareholders could enjoy higher returns. He also stated that the current increment shows how confident the company’s management team is in smooth cash flow for the future. This clearly helps them to increase dividends and will also help in the company’s expansion plans.
Before they made the announcement, AES Corp’s dividend yield was a mere 1.5 percent, which amounts to have the yield Duke Energy Corp pays, a company that is much larger. CenterPoint Energy Inc. pays only slightly over one third of said yield, which has practically the same market cap.
AES Corp also announced that it will be selling off 15 percent of their stake in AES US investments, which is one of IPALCO Enterprises subsidiaries and is worth $244 million. It should be noted that IPALCO Enterprises is owned by AES Corp. It is being purchased by an institutional investor and a company based in Canada known as La Caisse de depot et placement du Quebec (CDPQ).
The media says that the Canadian company also intends to invest $349 million in IPALCO. It is expected that this will happen in 2016 and the company will receive a stake of 17.65 percent.
When the deal is finalized, CDPQ will be the direct and indirect owner of a stake of up to 30 percent in IPALCO. Almost 85 percent of the stake in AES US Investments will be under AES Corp ownership, which will in turn hold a stake of 82.35 percent in IPALCO. However, it is not expected for any changes to occur in operational control or management positions as a direct result of these purchases.
According to AES Corp experts, the transactions will likely provide modest accretions to the company’s adjusted EPS, which is established on an abridged obligation to invest in the company’s potential expansion plans and various other projects for the environment. According to AES Corp’s internal news, the company intends to invest the money invested by CDPQ in accordance with the established financial plan the company currently has in the works. Therefore, the company will be moving ahead with the action plan it is currently following, and it is expected that no new projects will be formulated.
In a recent pre-market trading session, AES Corp shares increased by more than 2 percent, which means they are trading at $13.64. Over the past 12 months, the company’s shares have been trading between $12.38 and $15.65.
The company is playing a very favorable game for their investors by doubling the dividend every qyarter. Taking into account the latest transactions it is engaged in with foreign companies, analysts expect the company to offer up even better results.