OGE Energy: Staying Long As The Company Hikes Its Dividend 11.1%.
As an income-driven investor, dividend-related events (such as increases and decreases of a company's annualized dividend) are always something I tend to keep an eye on. With that said, and in the wake of its latest dividend increase, I wanted to highlight several reasons why I've chosen to stay bullish on shares of OGE Energy (NYSE: OGE).
Company Overview
Headquartered in Oklahoma City, Oklahoma, OGE Energy together with its subsidiaries, operates as an energy and energy services provider that offers physical delivery and related services for electricity and natural gas primarily in the south central United States. The company operates through Electric Utility and Natural Gas Midstream Operations segments.
The Electric Utility segment generates, transmits, distributes, and sells electric energy in Oklahoma and western Arkansas. The Natural Gas Midstream Operations segment is involved in gathering, processing, transporting, and storing natural gas; provision of crude oil gathering services, and interstate and intrastate natural gas pipeline transportation and storage service to natural gas producers, utilities, and industrial customers.
Trend Behavior Could Remain Solid Over the Next Few Months
As of Friday's close, shares of OGE, which have risen just over 11% year-to-date, currently possess a market cap of $7.36 billion, a P/E ratio of 17.43, and an annualized dividend yield of 2.70% ($1.00). Based on their closing price of $36.95/share, shares of OGE are trading 0.66% above their 20-day simple moving average, 1.02% above their 50-day simple moving average, and 3.53% above their 200-day simple moving average.
Based on their recent trends these numbers indicate both a short-term and mid-to-long term uptrend for the stock, which generally translates into a buying mode for most near-term traders and many long-term investors. With that said, I strongly believe we could see its trend behavior continue to improve on the heels of its latest dividend hike.
Recent Dividend Behavior
On Wednesday, September 24, OGE Energy announced a quarterly dividend increase of $0.02/share, which brings its upcoming dividend payout to $0.25/share. It should be noted that the increase will be paid on October 30 for shareholders of record as of October 10. This boost represents an 11.1% increase from its prior dividend of $0.23/share, which had been paid to shareholders during mid-July.
Strong 5-Year Dividend Growth
Over the last five years we’ve seen OGE Energy increase its annualized dividend from $0.726/share in 2010 to its most recent annualized dividend of $1.00/share. This behavior not only demonstrates an overall increase of $0.274/share or $0.0548/share per year but also demonstrates a 5-year dividend growth rate of 37.74%.
Conclusion
For those of you who may be considering a position in OGE Energy, I strongly recommend keeping a close eye on the company's dividend behavior over the next 18-24 months as subsequent annualized increases should directly impact both the company’s near-term trend behavior and the long-term value of its shares.
I am currently LONG on shares of OGE Energy.