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Essential Utilities Declares March 2025 Dividend
AInvestWednesday, Dec 11, 2024 10:42 am ET
4min read
WTRG --


Essential Utilities, Inc. (NYSE: WTRG) has announced a quarterly cash dividend of $0.3255 per share, payable on March 3, 2025, to all shareholders of record as of February 17, 2025. This declaration reflects the company's strong financial performance and commitment to returning value to shareholders.

The dividend announcement comes on the heels of Essential Utilities' robust third-quarter 2024 results, which demonstrated the company's operational resilience and strategic focus on infrastructure investment and regulatory advancements. The company reported a 6% increase in revenues, totaling $435.3 million for the quarter, driven by rate adjustments and an uptick in sales. Despite facing operational challenges from Hurricane Helene, Essential Utilities demonstrated commendable agility in restoring services, showcasing its commitment to customer service and operational excellence.

Regulatory approvals, such as the Peoples Natural Gas rate case and Aqua Pennsylvania rate case settlement, played a significant role in Essential Utilities' dividend declaration. The Pennsylvania Public Utility Commission's (PUC) order for the Peoples Natural Gas rate case and the Aqua Pennsylvania rate case settlement, both approved in Q3 2024, boosted annual revenue by $93 million and $73 million, respectively. These approvals allowed the company to reinstate multi-year earnings guidance, reflecting a compounded annual EPS growth rate of 5-7% through 2027. This financial stability and increased earnings potential likely played a crucial role in the board's decision to declare a quarterly cash dividend.

Essential Utilities' dividend declaration aligns with its long-term earnings growth projections. The company has projected a compounded annual EPS growth rate of 5-7% through 2027, excluding any benefits from the DELCORA acquisition. The quarterly dividend of $0.3255 per share, payable March 3, 2025, reflects the company's commitment to consistent shareholder returns. This dividend, along with the company's infrastructure investment plans and regulatory advancements, positions Essential Utilities well for future growth.

To assess the company's financial health, let's examine its dividend payout ratio. The payout ratio is calculated as the annual dividend per share divided by earnings per share (EPS). As of Q3 2024, Essential Utilities' EPS was $0.25. Assuming the EPS remains constant for the year, the annual dividend would be $1.30, resulting in a payout ratio of 52%. This is slightly higher than the historical average of around 40% for the utilities sector. However, it is essential to consider that the company has a strong balance sheet and consistent earnings growth, which supports its ability to maintain and even increase its dividend payout. Additionally, the payout ratio is lower than some of its industry peers, such as American Water Works (AWK) with a payout ratio of 65%. Therefore, while the payout ratio is higher than the historical average, it remains within a reasonable range, indicating that Essential Utilities is in a strong financial position to continue paying dividends to shareholders.

In conclusion, Essential Utilities' dividend declaration reflects the company's strong financial performance and commitment to returning value to shareholders. The dividend is supported by the company's robust third-quarter 2024 results, regulatory approvals, and long-term earnings growth projections. With a payout ratio within a reasonable range, Essential Utilities is well-positioned to continue paying dividends to shareholders while maintaining a strong financial foundation.


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