Progress Energy: Consistently Growing

Progress Energy (PGN) recently came up on a stock screen I ran while looking at electric utilities. The company has a long history dating back to 1925 and recently raised its dividend for the 20th straight year. Can PGN power up your portfolio?

Company Overview

Progress Energy is an electric utility company that operates in the Southeastern United States. Here is a partial overview from Reuters:

…The Company’s wholly owned regulated subsidiaries, Carolina Power & Light Company [PEC] and Florida Power Corporation [PEF] (collectively, the Utilities), each a business segment, are primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina, South Carolina and Florida. It has over 21,300 megawatts of regulated electric generation capacity and serves approximately 3.1 million retail electric customers, as well as other load-serving entities. Its non-regulated Coal and Synthetic Fuels segment is involved in the production and sale of coal-based solid synthetic fuels…

Dividend History
PGN has been the model of consistency with dividend growth. Just excellent.

7-Year Performance

If you had invested in PGN 7 years ago on this date, then you would be a very happy camper. The stock price has grown 72% from $28.36 to $48.75 at the close today. The dividend has increased 72% as well from $1.42 to $2.44. The yield on cost on those original shares would net you 8.6% today.

The Future

Progress Energy is a solid company in the high growth markets of Florida, North Carolina, and South Carolina. The company is constantly planning for future demand from growing populations. They have also realized the importance of becoming a better steward of the environment. For example, the company recently agreed to purchase electricity from two biomass plants. The dividend yield is right around 5% and the company has shown a long history of dividend growth.

Despite the good news, there are a few caveats. First, PGN has four nuclear plants. While many agree that nuclear is clean and safe, there is still a stigma associated with nuclear power. Second, the dividend growth slowed this year to only 1%. Nevertheless, PGN has successfully raised its dividend for 20 straight years. Lastly, the stock price is near the 52 week high and its price-to-earnings ratio is almost 19. After a flat third quarter, this seems like a premium for the shares at this time.

Disclosure: None

Comments

[stink726]

I'm not sure the figures in the paragraph entitled '7-Year Performance' are correct. The dividend 7 years ago appears to be $2.00 [1999] instead of the $1.42 you stated. Thus the 72% increase would be much less, wouldn't it?

[Jake Johnson]

Yes you are correct, I used the wrong dividend number. The paragraph should read...

If you had invested in PGN 7 years ago on this date, then you would be a very happy camper. The stock price has grown 48% from $32.98 to $48.75 at the close today. The dividend has increased 18% as well from $2.06 to $2.44. The yield on cost on those original shares would net you 7.4% today.

[Clearlead]

Wonder what the sense of this company is at this point given that its price per share has been knocked way down along with the whole sector?