Nine years ago CMS Energy Corp. (CMS) stood on the brink of bankruptcy. The longtime CEO had lost the confidence of regulators, shareholders and the utility�s Michigan customers.
After a scandal involving phony energy trades broke, he was forced to step down. That�s when current Chairman David Joos set the company on the road to recovery.
Joos focused on slashing debt, dumping unprofitable non-utility operations and repairing long-frayed relations with regulators.
There was plenty of pain along the way, including a four-year stretch during which the company paid no dividends.
Today CMS is an invest-to-grow story. The company again boasts an investment-grade credit rating and is reliably growing earnings and dividends.
CMS announced this month it will build a $750 million, 700-megawatt natural gas-fired power plant to enter service in 2017. That adds to five-year utility system capital spending plans of $6.5 billion to $7.3 billion already in the works.
Meanwhile, once-contentious Michigan has evolved into a model regulatory climate as a consequence of the state�s 2008 energy law.
The manufacturing boom in CMS� territory has further helped relations, with industrial sales surging nearly 6 percent the past 12 months.
Return on equity is a solid 10.3 percent, and the company has structured its investment to minimize rate increases.
CMS raised its dividend by more than 14 percent in 2012.
Expected 5 percent to 7 percent annual underlying earnings growth and a low payout ratio should ensure another 8 percent to 10 percent boost this month.
Coupled with sharply reduced financial and operating risk, CMS earns a move to the Growth Portfolio Core Holdings. Buy up to my raised target of 25.
Related articles
- Top stocks 2013: Enerplus
- Top Picks 2013: El Paso Pipeline
- Top stocks 2013: Origen Energy and Oil Search
No comments:
Post a Comment