Ameren Ramps Up Quarterly Dividend By 4%

Ameren Corp. announced an increase of 4% in its quarterly cash dividend to $0.515 per share from $0.495 per share. The quarterly dividend implies an annualized dividend of $2.06 per share, up from the previous rate of $1.98 per share. The dividend, which will be effective in the fourth quarter, will be payable on Dec. 31 to shareholders of record on Dec. 9.

Ameren’s (AEE) CEO Warner L. Baxter said that the dividend hike “marks the seventh consecutive year we have increased our dividend.” He added that “This action reflects confidence in the outlook for our businesses and ability to achieve our long-term earnings and rate base growth plans.”

On Aug. 7, Ameren reported 2Q earnings of $0.98 per share, beating the Street consensus of $0.87 per share. However, the 2Q operating revenues of $1.40 billion missed analysts’ estimates of $1.44 billion. Meanwhile, Ameren reaffirmed its 2020 earnings guidance range of $3.40 to $3.60 per share. (See AEE stock analysis on TipRanks).

On Sept. 21, Barclays analyst Eric Beaumont downgraded the stock to Sell from Hold but maintained a price target of $79 (3.7% downside potential), given the “disparate price moves and idiosyncratic news flow.” However he added that the dividend yield for utilities will continue to remain attractive on a relative basis, with historically low U.S. Treasury bond yields and corporate bond yields.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys, 2 Holds, and 1 Sell. The average price target of $84.50 implies upside potential of about 3% to current levels. Shares have advanced about 6.8% year-to-date.

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