Allegheny Energy sets 1st dividend in 5 years

BUSINESS DIGEST

October 05, 2007|By Bloomberg News

Allegheny Energy Inc., owner of utilities in four states, said yesterday that it will pay its first common stock dividend in more than five years after recovering from a near-bankruptcy.

Stockholders of record as of Dec. 3 will be paid a dividend of 15 cents a share on Dec. 17, Allegheny said in a statement.

The company, which is based in Greensburg, Pa., and serves Western Maryland, stopped paying a dividend in 2002 after a bad bet on energy trading pushed it close to insolvency. Allegheny's credit ratings were raised to investment grade this year by Moody's Investors Service and Standard & Poor's.

"We are now in a position to return cash to shareholders," chief executive Paul Evanson said.

Allegheny, which had losses of more than $1 billion in the three years ending in 2004, was one of six U.S. electric utility owners that didn't pay a dividend last year out of 65 companies tracked by the Edison Electric Institute industry group.

Allegheny's payouts to shareholders will be equivalent to about 30 percent of the company's earnings over the four quarters that ended June 30, spokesman Allen Staggers said. At yesterday's closing stock price, the company will have a dividend yield of 1.1 percent.

The utility industry averaged a payout ratio of 63 percent and a yield of 3.6 percent last year, according to Edison Electric Institute.

Shares of Allegheny rose $1.47, or 2.8 percent, to $54.86 in trading on the New York Stock Exchange yesterday. The shares, which sank to a closing low of $3.80 in October 2002, have climbed 19 percent this year.

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