Pennsylvania-based PPL (PPL) stock is currently trading at a dividend yield of 5.4%, the highest among S&P 500 utilities. This yield represents more than a 200-basis-point premium to the average utility yield.
PPL declared a dividend of $0.41 per share for Q4, representing an annualized dividend of $1.64 per share for 2018. The dividend will be paid on January 2, while the ex-dividend date is December 7.
PPL is trading at a superior dividend yield compared to its peers. However, PPL’s dividend per share growth in the last few years was much lower than the industry average. PPL’s dividend per share rose 2.1% compounded annually in the last five years. During the same period, utilities at large (XLU) managed to increase dividends ~4% compounded annually. PPL’s payout ratio was 75% for the last fiscal year, which was higher than its five-year average payout ratio of 65%.
PPL aims to grow its EPS by around 5%–6% per year through 2020, in line with utilities at large. PPL generates almost all of its earnings from regulated operations, which facilitates stable and predictable earnings. It earns two-thirds of its earnings from the United Kingdom. It plans to invest $3 billion per year, which could grow its rate base by 5.4% per year through 2022.
Read about how PPL stock performed so far this year in Where PPL Stock Could Go from Here.