Hats off to Vectren (VVC), our home town utility. VVC recently announced their 49th consecutive annual dividend increase. That puts the company near the top of the list of companies with the longest uninterrupted strings of dividend hikes.
VVC provides regulated gas and electric services to approximately one million customers in Indiana and Ohio. They also have a non-regulated division that is involved in power sales and management, and VVC is one of the largest coal producers in our area.
Vectren currently yields 5%, and our expectation is that its dividend will continue to grow over the next 3-5 years at just over 3% per annum. Three percent growth may not seem like much, but when added to its current 5% yield gives a projected total dividend return of 8%. That's not bad when compared to the 3.5% current yield on a 10-year T-bond, especially when considering the defensive nature of the utility business and VVC's long history of success.
Finally, the lower chart above shows that 5% is at the high end of VVC's dividend yield range over the last 7 years.
The current management team of VVC, headed by Niel Ellerbrook, carries on a long tradition of being good stewards of their shareholders' and their customers' trust.
