IDACORP (IDA) Dividend Report

3/10/25

IDACORP, Inc. (NYSE: IDA) is a well-established electric utility company serving Idaho and surrounding areas. Through its primary subsidiary, Idaho Power, the company provides electricity to a growing customer base, with a strong emphasis on hydroelectric power generation. As a regulated utility, IDACORP enjoys stable revenue streams, making it a solid choice for long-term investors looking for steady income.

While this stock doesn’t necessarily make headlines, it has a history of reliable performance, consistent dividend growth, and financial discipline. For those who prioritize predictable cash flow over market speculation, IDACORP offers an attractive combination of stability and income.

Key Dividend Metrics

📢 Forward Dividend Yield: 3.04%
💰 Annual Dividend Rate: $3.44 per share
📈 5-Year Average Dividend Yield: 2.99%
🔄 Dividend Growth Rate (5-Year CAGR): ~6% (based on historical trends)
📊 Payout Ratio: 60.91% (within a comfortable range for utilities)
⏳ Ex-Dividend Date: February 5, 2025
📅 Next Dividend Payment Date: February 28, 2025

Dividend Overview

For dividend investors, IDACORP offers a blend of moderate yield and consistent growth. With a forward dividend yield just over 3%, it’s not the highest-yielding utility stock, but it stands out for its reliability and sustainability.

One of the main advantages of IDACORP’s dividend is the stability of its cash flows. As a regulated utility, the company operates in a highly predictable environment where rate structures are largely set by government agencies. This ensures a consistent stream of revenue, which in turn supports regular dividend payments.

With a payout ratio of around 60%, there’s room for continued dividend growth while maintaining a solid financial position. Management has a track record of rewarding shareholders, and given the company’s history, future dividend increases seem likely.

Dividend Growth and Safety

IDACORP may not be a fast-growing stock, but it does offer steady and reliable dividend increases. Over the past five years, dividends have grown at an estimated 5-6% annual rate, which is a reasonable pace for a utility company.

There are several factors that make this dividend relatively safe:

• The payout ratio remains at a manageable level, providing room for future increases.
• The company generates consistent operating cash flow, totaling $594.42 million over the last year.
• The low volatility of the stock (beta of 0.59) suggests it’s a defensive play, holding up well during economic downturns.

Unlike some higher-yielding dividend stocks, IDACORP doesn’t stretch itself too thin. The company balances dividend payments with infrastructure investments, keeping long-term sustainability in focus.

Financial Health and Stability

As a capital-intensive business, IDACORP relies on a mix of debt and equity financing to maintain its operations. The company’s total debt stands at $3.07 billion, with a debt-to-equity ratio of 92.08%. While this level of leverage is common in the utility sector, it does mean that higher interest rates could increase borrowing costs over time.

Other key financial indicators:

• Return on Equity (ROE): 9.27% (decent for a regulated utility)
• Return on Assets (ROA): 2.26% (reflecting the capital-heavy nature of the business)
• Profit Margin: 15.83% (healthy but not the highest in the sector)

Short-term liquidity remains stable, with a current ratio of 1.41, meaning the company has enough assets to cover its short-term obligations. One point worth noting is the company’s negative free cash flow (-$522.05M), largely due to ongoing infrastructure investments. While this isn’t unusual for utilities, it’s something investors should keep an eye on.

Valuation and Stock Performance

At $114.97 per share, IDACORP is trading near its 52-week high of $120.42. The stock has seen steady price appreciation, reflecting investor confidence in the company’s earnings and dividend stability.

Valuation metrics show that IDACORP trades at a premium compared to some of its peers:

• Trailing P/E: 20.58 (a reasonable level for a stable utility)
• Forward P/E: 19.27 (indicating moderate growth expectations)
• Price/Book: 1.83 (higher than some competitors, but justified by steady earnings)

Compared to the broader market, IDACORP isn’t exactly a bargain, but its valuation is supported by consistent earnings growth and dividend payouts. The stock’s low beta (0.59) also makes it an attractive defensive play, particularly in uncertain market conditions.

Risks and Considerations

While IDACORP is a reliable dividend stock, it’s important to consider potential risks before making an investment decision.

🚨 Regulatory Challenges – As a regulated utility, IDACORP’s revenue depends on state-approved rate increases. If regulators push back on rate hikes, future earnings growth could slow.

📉 Interest Rate Sensitivity – Utility stocks are often affected by interest rate changes. Rising rates increase borrowing costs and make bonds more attractive, which can put pressure on stock prices.

⚡ Dependence on Hydroelectric Power – A significant portion of IDACORP’s electricity generation comes from hydroelectric sources. If water levels decline due to drought or environmental factors, the company may face increased costs or reduced energy output.

🔧 Capital-Intensive Business Model – Like most utilities, IDACORP has high infrastructure costs. Ongoing capital expenditures mean that free cash flow is often negative, which could limit dividend growth in the future.

Despite these risks, the company’s financial discipline and stable revenue base help mitigate major concerns.

Final Thoughts

IDACORP may not be the most exciting stock on the market, but for dividend investors seeking stability and gradual income growth, it’s a strong contender. The company’s 3.04% yield is modest but reliable, and its steady dividend increases make it a solid choice for long-term income investors.

As a low-volatility, defensive stock, IDACORP is well-suited for those looking to add a stable income-generating asset to their portfolio. While its valuation is on the higher side, the stock’s predictable cash flows, well-managed debt, and commitment to dividends make it an attractive option for those focused on income rather than speculation.