SOURCE: The Bedford Report

The Bedford Report

February 07, 2011 08:46 ET

PPL & Constellation Energy's Dividends Threatened by Rising Costs

The Bedford Report Provides Analyst Research on PPL Corporation & Constellation Energy

NEW YORK, NY--(Marketwire - February 7, 2011) - Combating rising costs, several companies in the Electric Utilities Sector issued disappointing 2011 guidance. The poor outlook has led many investors to question whether key industry players will be able to maintain their healthy dividends. Stricter environmental regulations require that any new power plants built that are large enough to produce 75,000 tons of carbon dioxide a year must use the best available control technology, which is expected to add significantly to operational costs. The Bedford Report examines the outlook for companies in the Electric Utilities Industry and provides research reports on PPL Corporation (NYSE: PPL) and Constellation Energy Group, Inc. (NYSE: CEG). Access to the full company reports can be found at:

Last Friday, PPL Corporation reported fourth quarter net income of $355 million or 73 cents per share, compared with $153 million, or 40 cents per share, a year ago. Revenues for the quarter rose to $1.86 billion from $1.71 billion a year ago. PPL expects 2011 earnings of $2.40 to $2.60 per share, compared to the Wall Street estimate of $2.63 a share.

Presently PPL pays an annual dividend of 1.40 for a hefty yield of around 5.40 percent.

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PPL's industry peer, Constellation Energy, said last week that its fourth quarter net income stumbled to $159.8 million, or $0.79 per share, compared to earnings of $4.4 billion, or $21.96 per share, in the same quarter last year. The company pays an annual dividend of 96 cents for a yield of about 3 percent. According to its earnings statement, Constellation had $2.03 billion in cash on hand at the end of the fourth quarter. CEG CEO Mayo A. Shattuck III said during the earnings call that the company plans to spend much of its cash acquiring more power plants in areas where the company has large amounts of customers buying its power.

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