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PPL boosts dividend after posting consensus-beating Q4, FY'16 earnings

PPL Corp. raised its quarterly dividend 4% to 39.5 cents per share after recording year-over-year increases in fourth-quarter and full-year 2016 earnings.

The dividend, which equates to $1.58 per share on an annualized basis, will be paid April 3 to shareowners of record as of March 10.

The Allentown, Pa.-based company on Feb. 1 posted fourth-quarter 2016 earnings from ongoing operations of $409 million, or 60 cents per share, beating the S&P Capital IQ consensus estimate for normalized EPS by 8 cents. The result reflects a 39% increase from $294 million, or 43 cents per share, booked in the same quarter of 2015.

PPL's Kentucky and Pennsylvania regulated segments contributed fourth-quarter 2016 EPS from ongoing operations of 12 cents and 11 cents, respectively, compared with 9 cents each for the corresponding quarter of 2015.

The increase in the Kentucky regulated segment, which consists primarily of Louisville Gas and Electric Co. and Kentucky Utilities Co., was driven by higher sales volumes due to weather and by lower operation and maintenance expense.

The increase in the Pennsylvania regulated segment, which consists of PPL Electric Utilities Corp., was attributed to higher base electricity rates for distribution and higher transmission earnings and a benefit received in 2015 from the release of a gross receipts tax reserve.

The U.K. regulated segment, which consists of the regulated electricity delivery operations of Western Power Distribution, posted fourth-quarter 2016 EPS from ongoing operations of 40 cents, compared with 29 cents for the 2015 fourth quarter.

The company recorded fourth-quarter 2016 operating revenues of $1.83 billion, an increase from $1.78 billion in the corresponding quarter of 2015. It booked a $97 million year-over-year increase in operating income to $714 million for the most recent quarter.

PPL reported fourth-quarter 2016 GAAP net income available to its shareowners of $465 million, or 68 cents per share, compared with $399 million, or 59 cents per share, for the same period of 2015. Results for the 2016 quarter included net special-item, after-tax credits of $56 million, or 8 cents per share, from foreign currency-related economic hedges.

On a full-year basis, PPL booked 2016 earnings from ongoing operations of $1.67 billion, or $2.45 per share, compared with $1.49 billion, or $2.21 per share, for 2015. The S&P Capital IQ consensus estimate for normalized EPS for 2016 was $2.38.

The results also were at the high end of the company's earnings from ongoing operations forecast range of $2.30 per share to $2.45 per share. "The past year demonstrated the strength of our diverse portfolio of regulated utilities as our U.S. and U.K. companies all delivered or exceeded expected results," PPL Chairman, President and CEO William Spence said in the company's earnings release.

For 2016, PPL's operating revenues were down to $7.52 billion, from $7.67 billion in 2015. Full-year operating income rose to $3.05 billion in 2016, compared with $2.83 billion in 2015.

The company's 2016 GAAP net income available to its shareowners was up to $1.90 billion, or $2.79 per share, from $682 million, or $1.01 per share, in 2015. The 2015 result includes a $921 million loss from discontinued operations, or $1.36 per share, resulting primarily from the June 2015 spinoff of the company's competitive supply business.

PPL reaffirmed its full-year 2017 EPS forecast of $2.05 to $2.25 and continues to target compound annual growth rate of 5% to 6% from 2017 to 2020.