TEG – What a Mistake !

TEG is a utility company which had been raising its dividend for last 51 consecutive years. It was one of most recent investment in which I had initiated a starter position. The company increased its 2009 dividends by approximately 7% to $2.68. However, the most recent earnings release has been quite an opposite of one would have expected from a dividend growth company. The earnings per share for 2008 was $1.64. At the same time, the company is projecting 2009 earnings per share in the range of $2.51 to 2.66. This is more than 100% payout factor. What is intriguing to me is why did the company raise the dividend just few days ago, when they knew it is not supported by the expected by the earning? This definitely leads to the issue of shareholder communication! continue reading rest of the article….

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