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Topic: Dividend Stocks

Alliant ready for tough greenhouse gas regulations

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Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.

The U.S. Environmental Protection Agency plans to bring in new rules forcing power plants to cut their greenhouse gas emissions by 30% by 2030.

Alliant is upgrading its facilities in response. Regulators will probably let it pass along most of the extra costs to customers in the form of higher rates. We feel Alliant is in a good position to handle the new regulations.

ALLIANT ENERGY CORP. (New York symbol LNT; www.alliantenergy.com) sells electricity and natural gas to 1.4 million customers in Wisconsin, Iowa and Minnesota.

The company has earmarked $5.2 billion for plant upgrades and replacing older transmission lines and pipelines between 2014 and 2018. These funds include $750 million for a gas-fired plant that should replace some of its older coal facilities (coal accounts for about half of Alliant’s electricity production).


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Dividend stocks: Hiked by 7.8%, Alliant dividend yields 3.3%

Partly due to the extra costs incurred for upgrades, Alliant’s earnings fell 2.3%, to $155.2 million, or $1.40 a share, in the third quarter of 2014. A year earlier, it earned $158.9 million, or $1.43.

Cooler-than-normal weather also cut its earnings by $0.06 a share in the latest quarter. Revenue fell 2.7%, to $843.1 million from $866.6 million.

The company probably earned $3.47 a share in 2014. The stock trades at a high, but still reasonable, 19.9 times that estimate. Alliant recently increased its annual dividend rate for the 12th consecutive year, raising it by 7.8% to $2.20 a share, for a 3.3% yield.

Alliant Energy is a buy recommendation of our advisory on U.S. investing, Wall Street Stock Forecaster.

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