This is part five of “How to Not Wake Up Broke in Your 80s.”
It’s simple. Own stock in companies in essential industries, with long histories of overperformance and solid dividends, and invest in companies that are stockholder friendly.
Wisconsin Energy (NYSE: WEC) has it all.
It has a 70-year history as a reliable dividend payer. It is in the middle of a $300 million share repurchase program, and its payout ratio has increased from 36% in 2007 to 60% today. All are rock-solid indications of a very stockholder-friendly company.
Barclays rates it as one of the top six utilities for income investors.
Its customer base is growing at one of the fastest rates in the country. The state of Wisconsin has a steady influx of residents from the Chicago area and the population is expanding at a rate of 6.8% a year.
Wisconsin Energy is making the tough changes necessary to remain competitive for a long time.
It reduced its coal use by 22% in 2012 and expects total coal use to be down to 50% this year. Its nearest competitors are not even close to that number.
And Governor Scott Walker has established a record as a pro-business administration, and has fostered a positive political and macroeconomic environment.
Going forward, Wisconsin Energy is expected to outperform the utility sector as a whole and is recognized as the most-reliable utility in the Midwest.
The stock is fully valued at present, but it is expected to show strong earnings and revenue for the next five years, clocking in at a growth rate of 6% annually. While that may seem tame compared to non-utility stocks, for a utility it is excellent.
The world runs on electricity, and Wisconsin Energy is showing all the signs of a leader in the industry for at least the next decade.
A long dividend history, a solid stockholder-friendly record, growing earnings and revenues, and the company is shifting to a much less expensive and cleaner fuel source, gas.
Wisconsin Energy is one to consider for your retirement portfolio.