Hawaiian Electric Industries (HE) has been paying dividends since 1901. I think you have to
take some comfort in that. Their position is solid in other ways too. They operate on the
islands of Oahu, Hawaii, and Maui, Lanai, and Molokai serving over 400,000 customers ranging
from single family home, to resorts, and even the U.S. military.
Hawaiian Electric also provides a variety of banking and financial services in the islands. And I have to admit, that scares me a little bit. The good news is that the financial services is a smaller part of their business. How small, and how good should we feel about it? I just can’t tell. Here’s what I do see in their financials.
In the Q3 2008 Form 10-Q, their revenues are about 90% based on utilities and 10% based on
banking. So far, so good. Their operating income is about 70% utility based and 30%. Again, so far, so good. Their is also other income of about $32,000 though, and other operating loss of over $2 million. (Please run the math yourself for exact numbers.)
If they weren’t involved in banking I’d probably skip right over that, but right about now,
I’m scared of banking and financial services.
If you can get past the banking exposure, (And let’s face it. That MAY be no problem), HE
has a share price of just over $21 and an indicated yield of 5.6%. One last caution. Based
on those numbers, they are paying out almost 90% of earnings as a dividend. Sure, we expect
utilities to be high, but can we really believe that will continue at that level?
banking, electric utilities
banking, electric utilities, financial services, Hawiian Electric, HE