Duke Energy Corporation DUK continues to maximize shareholders’ wealth through the payment of steady as well as incremental dividends. The board of directors has yet again raised its quarterly cash dividend rate by 3.8% to 82.5 cents per share. The revised dividend will be paid on Sep 16, 2015, to shareholders of record as of Aug 14.

On an annualized basis, Duke Energy’s dividend rate will come to $3.30 per share. The company’s current annual dividend yield is 4.38%, significantly higher than the sector average.

Duke Energy has paid quarterly cash dividend for 89 consecutive years. The company hiked its quarterly dividend rate every year since Jan 2007 after the spin-off of Spectra Energy.

Duke Energy continues to target a long-term dividend payout ratio of 65–70% of its adjusted diluted earnings per share.

The company strives to maintain a stable financial position. As of Mar 31, 2015, the company had cash & cash equivalents of $2,821 million, up from $2,036 million as of Dec 31, 2014. Net cash flow from operating activities in the first quarter 2015 was $1.46 billion, up from $1.37 billion a year ago. A favorable financial position supports the company’s practice of paying dividends.

In Apr 2015, Duke Energy also entered into an agreement to repurchase about $1.5 billion of its common stock from Goldman, Sachs & Co. and JPMorgan Chase Bank. The buyback will be made under an accelerated share repurchase program.

Its liquidity position as well as a sturdy cash generation capacity also enables Duke Energy to pursue development projects. The company has plans to make capital investment of $7.4 billion in 2015, $9.4 billion in 2016 and $7.8 billion in 2017. Its strong financial position, stable regulated operations, a systematic capital investment program and renewable asset expansion are likely to provide vital tailwinds.

Duke Energy currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same industry include Dynegy Inc. DYN, Consolidated Edison, Inc. ED and DTE Energy Company DTE. While Dynegy carries a Zacks Rank #1 (Strong Buy), Consolidated Edison and DTE Energy hold a Zacks Rank #2 (Buy).

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