Sempra Energy Plans to Raise Stock Dividend 16%

Sempra Energy, owner of the largest natural gas utility in the U.S., announced a 16% dividend increase, the first boost to shareholder payouts since the company was formed in 1998.

Quarterly dividends will increase to 29 cents from 25 cents, starting with payments on April 15 to shareholders of record as of March 24, San Diego-based Sempra said in a statement. Dividends will rise 3% to 4% annually in future years, the company said.

Sempra slashed its 39-cent quarterly dividend to 25 cents and announced a stock buyback in January 2000 to finance new investments and boost the company’s share price. Chief Executive Stephen Baum bought up energy and metals trading businesses and plans to build natural gas import terminals.

“We have succeeded in our growth strategy,” said Baum, 64. “We can accomplish this dividend increase while delivering our future growth plans and maintaining strong, investment-grade credit ratings.”

Sempra’s dividend yield, or annual stockholder payout divided by share price, is about 2.9% after the increase, according to Bloomberg data. That compares with 4.1% for Duke Energy Corp., the largest U.S. utility owner, and 3.6% for Exelon Corp., the second largest.

Sempra this month said its 2004 per-share profit rose to about $3.80, exceeding company projections, as earnings from commodities trading increased.

Shares of Sempra fell 22 cents to $39.28 on the New York Stock Exchange. The stock, which has risen 7.1% this year, has four “buy” ratings and seven “hold” recommendations from analysts.