DTE Energy (DTE) revealed that its board of directors has declared a pro-rata dividend of the outstanding shares of DT Midstream. Shares of the diversified energy company have gained 17% over the past year.
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In addition to the retention of their current shares, DTE shareholders will receive one share of DT Midstream common stock for every two shares of DTE held.
The stock dividend, subject to certain regulatory approvals, is payable on July 1 to shareholders of record on June 18.
DTE Energy CEO Jerry Norcia, commented, “Following the separation, DTE will be a best-in-class predominantly pure-play utility that is well positioned to continue delivering clean, safe, reliable and affordable energy and significant value creation.”
He further added, “DT Midstream will also be poised for success and value creation with numerous growth opportunities as a premier, independent midstream company with assets in premium basins connected to major demand markets.”
Fractional shares of DT Midstream will be aggregated and sold in the open market. The resulting proceeds will be used to make cash payments to DTE shareholders who would otherwise receive a fractional share of DT Midstream common stock. (See DTE stock analysis on TipRanks)
DT Midstream common stock is expected to trade temporarily on a “when-issued” basis on the NYSE under the ticker symbol “DTM WI” from June 17.
However, from July 1, DT Midstream will begin regular trading on the NYSE under the ticker symbol “DTM”.
Notably, from June 17 to July 1, DTE shareholders who sell their shares will also be selling their entitlement to receive DT Midstream common shares in the distribution.
On May 27, Mizuho Securities analyst Anthony Crowdell increased the price target on DTE from $139 to $146 (6.3% upside potential) and reiterated a Buy rating.
Crowdell believes in the DTE pure-play story following the completion of the expected spin-off of the midstream business. He further estimates DTE to trade at superior multiples based on its balanced regulatory jurisdiction and limited equity needs.
Overall, the stock has a Hold consensus rating based on 3 Buys, 6 Holds, and 1 Sell. The average analyst price target of $142.44 implies 3.7% upside potential from current levels.
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