PG&E Corp. will be paying out its first common stock dividend in six years, the company announced Nov. 28, citing "substantial progress in becoming a safe and stable utility."
PG&E Corp. declared a regular quarterly cash dividend of 1 cent per share, payable Jan. 15, 2024, to shareholders of record as of Dec. 29. Moving forward, the company expects to pay a common stock dividend from its net income to shareholders every quarter.
The California utility suspended its dividend in December 2017 due to growing wildfire-related liabilities that ultimately led it to its joint $58 billion bankruptcy restructuring with operating subsidiary Pacific Gas and Electric Co. (PG&E).
"With this milestone reached, our stock will be investable once again for those long-term utility and income-focused investors who require a dividend payment," PG&E Corp. CEO Patti Poppe said during a Nov. 28 conference call, acknowledging that "having a normal utility profile will take some time on the dividend front."
"We expect to recommend growing the dividend at least as fast as our industry-leading earnings per share growth and potentially quite a bit faster given our low starting point," Poppe said.
Shares of PG&E Corp. were trading approximately 2.50% lower at midday Nov. 28, hovering around $17.45.
PG&E Corp. said its third-quarter 2023 results passed the earnings threshold included in its plan of reorganization. PG&E Corp. on Oct. 26 reported non-GAAP core earnings of $513 million, or 24 cents per share, in the third quarter, compared with $608 million, or 29 cents per share, in the year-ago period. The S&P Capital IQ normalized consensus EPS estimate for PG&E Corp. in the third quarter was 25 cents.
As part of its deal with California Gov. Gavin Newsom to exit bankruptcy, PG&E Corp. committed not to reinstate its dividend for about three years. The company said it also needed to recognize $6.2 billion in non-GAAP core earnings before paying out a dividend. Management suggested in July that the dividend could return after the third quarter. The company emerged from Chapter 11 bankruptcy protection in July 2020.
Poppe emphasized that the company aims to unload "at least $2 billion of parent debt by 2026" as part of its commitment to regain investment-grade credit ratings.
The utility parent also revised its non-GAAP 2023 EPS guidance to a range of $1.20 to $1.23 from a range of $1.19 to $1.23 and introduced 2024 EPS guidance ranging from $1.31 to $1.35.
The guidance highlights PG&E Corp.'s "confidence" after the California Public Utilities Commission on Nov. 16 authorized an increase in PG&E electric and gas base rates of $2.59 billion over the 2023–2026 time frame, according to Poppe.
The rate increase is about half the $5.21 billion sought by PG&E.
More than 85% of the proposed increase originally submitted in June 2021 was to reduce risk in its gas and electric operations, primarily wildfire risk. The rate case enables PG&E to underground 1,230 miles of electric transmission lines and insulate 778 miles of conductor lines to mitigate that threat. PG&E initially sought approval to underground 2,000 miles of power lines, which would have amounted to an 18% monthly bill increase for the typical residential customer.
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