Avista Corp. has increased its common stock dividend yet again and seems intent on continuing to boost that key indicator of the companys financial health.


The companys board of directors declared on Aug. 16 a quarterly dividend of 14.5 cents a share, payable Sept. 15 to shareholders of record on Aug. 31. The amount is a half-cent more than the company paid in June.


This is the fifth dividend increase authorized by the board in the past three years, and it is an important indicator to our shareholders of the progress we are making in restoring our financial health, Chairman and CEO Gary Ely said when the company announced the higher dividend. Even with this increase, we continue to reinvest the majority of our shareholder earnings in the infrastructure and operation of the company to the benefit of our customers.


Avista raised its quarterly dividend by almost 4 percent from the 14 cents a share it paid in December, March, and June. It raised its dividend by half-cent increments in September 2003, June 2004, March 2005, December 2005, and now once again.


Common stock dividends, payable in cash to shareholders, are a key factor in the valuation of a stock because they provide income to stockholders and usually are paid from net income, which means theyre an indicator that a company is profitable.


In December 1998, during the dot-com boom, the company slashed its quarterly dividend to 12 cents a share from 31 cents to fund investments in technology ventures. That action stunned many longtime shareholders who had bought Avistas stock as a source of income as well as for its relative stability. For decades, predictable income payments and price stability had been hallmarks of utility stocks.


Unlike some utilities, Avista continued to pay its dividend as it worked to overcome losses from subsidiary operations and a wholesale energy price run-up, then began raising its dividend two years after Ely took over the helm.


Avista spokeswoman Jessie Wuerst says Ely has said since he became the companys CEO that Avista would work to be the best regional utility it could be, as opposed to a technology company, and would seek to restore its dividend.


Avista said its new quarterly payment amount will result in an indicated annual dividend of 58 cents a share, although even at that level the company would be paying out only about 45 percent of its annual earningsprojected this year at $1.30 to $1.45 a share.


The Edison Electric Institute, which follows the utility industry closely, says that the standard dividend payout rate for the industry is about 66 percent of earnings.


In the long term, the board would like to move our company back in line with the industry average, Wuerst says. Before we get there, the board sees the need to return our company to financial health through effectively managing our debt as well as investing in our infrastructure.


Whether to declare a quarterly common stock dividend always is at the boards discretion, Wuerst says. We cant say whether the board will declare a dividend every quarter, she says, but adds, We anticipate that they will.


Contact Richard Ripley at (509) 344-1261 or via e-mail at editor@spokanejournal.com.