For Income Investors:
UIL Holdings |  - Co. Spotlights available via RSS feed
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Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk. | | UIL | $28.53 | Why It's Featured: Yield is well above average for utilities.
Keep an Eye On: New construction for two, 200 megawatt units. | Dividend Yield | 6.1% | | Dividend/Earnings | .90 | | Financial Strength | B++ | | Div. Date: Mar 31 | Ex-Div: Mar 8 |
March 4, 2010 - UIL Holdings (UIL-NYSE) through its joint venture, the United Illuminating Company, engages in the purchase, transmission, distribution, and sale of electricity for residential, commercial, and industrial purposes in the southwestern part of the State of Connecticut. As of December 31, 2009, it had approximately 325,000 customers. The company was founded in 1899 and is headquartered in New Haven, Connecticut.
UIL has had a tough 2009 and then a snow storm blasted through in early 2010. Last year, demand was down for electricity as the poor economy made everyone more frugal. Revenues were down from $948.7 million to $896.6 million. Still, management delivered higher earnings, finishing the year at $1.93 per share, up from $1.89. The reasons for better results: regulatory relief and lower operating costs. Performance in its transmission business also improved. This is a relatively small utility with a Market Cap of $825 million. So it's not for all Income investors. Its size may cause some concern. But the dividend is $1.73 a year (has been for the last 3 years) which gives a yield of 6.1%, well above the average utility yield of 4.9%. However, the dividend takes 90% of earnings to pay so the potential for higher dividends in the near future is very low. 6 analysts following the company see earnings improving this year and next, going to $2.06 (vs. $1.93 last year) followed by $2.18 in 2011. Revenues should bounce back, hitting $980 million this year and $1.00 billion in 2011. Slow growth is expected which in this economy is a positive sign.
There is a big project underway: infrastructure upgrading. It involves two, 200-megawatt peaking generation units and is a joint venture with NRG Energy. Bank financing will fund the upgrades and is in place. Construction is on schedule at this time, and the first unit (in Devon) will be up and running by June, if the schedule holds. The second, in Middletown, is due to fire up in June, 2011. Together these two plants should amplify UIL's capabilities for delivering electricity for decades. More numbers: Trailing P/E is 14.86, Forward P/E 13.10. Price to sales ratio is .95 while Price to book is 1.48. Book value is $19.25. Operating margin for the last 12 months was 13.65% while Profit margin was 6.06%. Return on equity was 10.39%. Return on assets was 3.56%. Total cash is $15.27 million or 51 cents a share. Total debt is $731.8 million. Current ratio is .97. There are 29.85 million shares outstanding with a Float of 29.21 million. Insiders own 7.26%. Institutions have 49.8% of the stock. The story here is the dividend. There's nothing exciting for investors to bid this stock higher. The company offers services in a well-defined region and has done so since 1899. The stock got hammered in early 2009, along with the rest of the market, touching a low of $17 before hiking back up to its current level. It's all about the income here. And if you like a stock that has delivered steady dividends for years, then, after more research, you may find this one to your liking. - Company Web site: www.uil.com - Ted Allrich |
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