Teco Energy (TE)
I just read an article in Kiplingers which outlines a bright future for coal in our energy future. I believe they are largely correct. To put it simply, we use too much energy and have too much coal to think that it won’t play a large part in our future as cheap oil runs out. My problem is that I feel better with a high dividend payment along with a good story.
When I look at the major coal producers, (Peabody ( BTU), Arch Coal (ACI) , Consol Energy (CNX)), I just can’t find a generous dividend. Which got me thinking of Teco Energy (TE). Teco Energy is an energy holding company with several divisions. Tampa Electric is an electric utility operating in Florida. Peoples Gas is a Florida provider of natural gas. Teco Transport ships energy products. Teco Guatemala produces and distributes energy in Guatemala. And that leaves us with Teco Coal.
Teco Coal owns and operates low-sulfer coal mines and produces synthetic fuels. They provide fuel to the steel industry and to other utilities, as well as using it themselves to produce electricity. Their work with synthetic fuels qualifies them for federal tax credits. According to their quarterly financials dated 10/30/08, Teco Coal is a major part of their revenues and net income.
All of which makes me think of Teco as a fair play on the growth of coal with a nice dividend to boot. As I write this, Teco is trading for $12.54, with a dividend of over 6%. That sounds good to me even without any kind of a boost from the growth of coal.