SCANA: Powering the Carolinas

04/14/2015 8:00 am EST

Focus: STOCKS

David Dittman

Chief Investment Strategist, Australian Edge, Canadian Edge, & Utility Forecaster

I’m a longtime fan of this South Carolina-based utility; we’re adding it to our Income Portfolio as an aggressive holding, suggests David Dittman, editor of Utility Forecaster.

SCANA Corp. (SCG) has raised its payout 16 straight times since 2000. The quarterly dividend is up to $0.545 per share after an increase of 3.8% on February 19, 2015.

And SCANA has put together a solid track record of growth over the past decade and a half, validating management’s decision at the tail-end of the last century to shepherd cash with an eye on the longer-term.

SCANA—trading at attractive valuations of 1.58 times book value and 14.98 times forecast full-year 2015 earnings and with a yield of 4%—is well placed to continue on this path, SCANA’s businesses include regulated electric and natural gas utility services, gas transmission, and retail gas and energy marketing.

Its primary subsidiary, South Carolina Electric and Gas, serves 675,000 electric utility customers and 325,000 natural gas customers in the central, southern, and southwestern portions of South Carolina.

Public Service Company of North Carolina serves 500,000 natural gas customers in north, central, Piedmont, and western parts of North Carolina.

SCANA is also involved in retail natural gas marketing in Georgia, Federal Energy Regulatory Commission-regulated natural gas transportation via its Carolina Gas Transmission subsidiary, and wholesale energy marketing in the Southeast. 

Management reported 2014 earnings per share of $3.79, up 11.8% compared to 2013 on higher electric margins due to favorable weather, rate increases, and continuing customer growth across its regulated operations.

The regulatory environment in its operating territory is very friendly, and the relatively strong Carolinas economy supports strong customer growth.

SCANA—which offers visible earnings growth coupled with consistent dividend growth at a reasonable price—is a buy under $60.

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