California Water Service Group (CWT, Financial), which provides water utility to California, New Mexico, Washington and Hawaii, announced a quarterly dividend. Shareholders of record on Monday, Nov. 12 will be paid a dividend of 0.1875 cents per share on Friday, Nov. 23. This equates to a dividend yield of 1.655% and an annualized dividend of 75 cents.
Over the last three years, the company has increased its dividend by an average of 3.5% annually and has increased its dividend every year for the last 50 years. A 60% payout ratio means that all dividends are sufficiently covered by the company's earnings.
California Water Service Group is expected to earn $1.42 per share next year, which would allow it to cover its 75-cent annual divided.
The company, which recently announced that it would provide resources to assist in water line repairs and other relief efforts in California’s Camp Fire, met expectations with its third-quarter earnings. California Water Service Group posted $0.72 earnings per share on the quarter, meeting Thomson Reuters’ consensus estimate. The company earned $0.70 earnings per share during the same period last year.
Revenue came to $219 million during the quarter, which failed to reach estimates of $249.64 million but was still up 3.4% year over year. Return on equity was 8.44%, and the company had a net margin of 8.54%.
Net income totaled $44.9 million, or 93 cents earnings per diluted common share. During the same period in 2017, the company posted $53.5 million, or $1.11 earnings per diluted common share. The decline in net income was due to the $5.1 million increase in expenses.
Total operating expenses increased $4.1 million to $173.4 million in the third quarter, up from $169.3 million in the same quarter last year. Water production expenses were up $3.5 million to $78.8 million compared to $75.3 million during the same period in 2017. Administrative and general operations expenses were also higher, increasing $4.4 million to $48.4 million during the quarter. The higher costs were primarily due to employee pension benefits and employee and retiree medical costs.
The company expects its capital investment for the year to be in the range of $240 million to $260 million. It raised $300 million in first mortgage bonds in the quarter, which allowed it to refinance its California Water Service Company line of credit. The refinancing will be used to support planned improvements to distribution and transmission pipelines, which will aid in the upgrade of aging water systems.
Disclosure: The author does not have any stake in the listed equities.
