Energy firm E.On will hike its dividend next year after reducing debt

Caitlin Morrison
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E.ON Announces Withdrawal From Conventional Energy
Eon's news will be sweet for investors (Source: Getty)

E.On, the Germany utility firm, has announced plans to hike its dividend after reducing its debt.

The group reduced net debt from €26.3bn (£23.7bn) at the end of 2016 to €21.5bn at 30 June this year, and said it had "successfully conducted a capital increase of roughly €1.35bn" in March.

The company's boss, Johannes Teyssen, said the restrengthening of the balance sheet gives E.On "the opportunity to allow our investors to share in our success by means of a dividend payout commensurate with the market".

"Beginning with the dividend for the 2018 financial year, we therefore intend to raise our payout ratio from the current 50 to 60 per cent to a minimum of 65 per cent. This would put us on par with our relevant competitors," he said.

Teyssen added that E.On also sees the possibility of investing in growth.

"Our businesses and markets offer attractive opportunities with reasonable risks," he said.

"At the time we release our results for 2017, we’ll present our updated growth and investment strategy. As you can see, for us investments and dividends aren’t mutually exclusive.

We have the opportunity to increase both in the interest of our customers, employees, and shareholders. And that’s precisely what we intend to do.

"Additional investments will also lay the foundation for greater customer benefit, better products, more growth, and stable earnings streams in the future. All of this will benefit our shareholders as well."

E.On posted its biggest ever loss in March, causing shares to slide by more than three per cent at the time.

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