TECO EnergyTE

Morningstar Rating

Stock Research and Analysis

by Travis Miller

Several key steps remain in TECO Energy's decade-long turnaround, but if the company clears those hurdles, we think investors could be rewarded with significant long-term earnings and dividend growth. Among the hurdles are capital investment goals at Read more

Bulls Say

After four years without a dividend increase, TECO raised it in 2007 and 2008, to $0.80 per share. Before 2003, it had raised its dividend for 43 consecutive years.

Tampa Electric can earn up to 12.25% returns on equity before sharing any upside profits with rate payers.

TECO's Polk Power Station, which runs on coal-derived syngas, was one of the first of its kind in the world and produces some of the cleanest coal-fueled power in North America.

As of early 2009, TECO Coal contracts and hedges in 2009 and beyond should allow it to capture higher margins. Read more

Bears Say

The housing market collapse and a recession could slow energy demand and infrastructure investment, which drive earnings growth at utilities.

Residential electric rates for TECO customers are higher than the average rates for FP&L or Progress Energy customers, hurting TECO's case for rate increases.

Aggressive debt reduction and tight credit markets could jeopardize dividend growth if profits sag.

Unless TECO receives approval to build new power plants, post-2011 asset base growth could dip below 3%. Read more

Strategy

The 180-degree strategy reversal from a diversified energy company to a fully regulated utility is nearly complete. TECO has shed $4 billion of assets since 2003 and used the cash to restore its credit Read more

Management

CEO and chairman Sherrill Hudson, a retired partner at Deloitte & Touche, joined the TECO board in 2003 and assumed CEO duties in 2004. He has led the company's shift back to focusing on its regulated operations. Charles Black, who started as an Read more

Profile

TECO Energy is a diversified utility holding company. Its regulated electric and gas utilities provide electric service to customers in western Florida and distribute and Read more

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