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Germany's RWE forecasts dividend hike after Innogy break-up

Reuters  |  ESSEN, Germany 

By Christoph and Tom Käckenhoff

ESSEN, (Reuters) - German utility expects to raise its dividend by more than expected in 2019 after announcing a plan to become Europe's third-largest by splitting its business with rival

has shifted to solar and wind power after Japan's Fukushima disaster seven years ago triggered a phase-out of nuclear power, turning the coal and nuclear based business model of the country's utilities on its head.

The deal will give control of Innogy's and E.ON's renewable units, turning one of Europe's largest CO2 emitters into the No.3 group behind Italy's and Spain's

said on Tuesday that its ordinary dividend was expected to rise to 0.70 euros ($0.86) per share in 2018, up from 0.50 euros in 2017, with a further increase planned in 2019, when analysts polled by had expected it to remain flat.

Shares in and extended Monday's deal-driven gains into Tuesday, rising by 1.9 percent and 5.5 percent respectively, making them the two biggest gainers among Germany's blue chip stocks.

"This transaction will create two focussed and fortified companies, which will be successful European players," told journalists on Tuesday.

Under the proposed deal will focus on Innogy's gas and power networks, raising its share of profits from regulated assets to about 80 percent from 65 percent, and giving it some 50 million European clients.

carved out and listed in 2016, hoping to extract more value from its networks and renewables assets, the most promising areas of the crisis-ridden utility sector. It has since tried to find a buyer for its 76.8 percent stake.

Analysts polled by had on average expected dividend to be stable at 0.71 euros per share for 2018 and 2019. Its total dividend payout for 2017 also includes a 1.00 euro special dividend due to a nuclear fuel tax rebate.

E.ON, which also said its dividend would rise in 2018 as it released strong results on Monday, will keep some renewables assets in the deal, notably its 1.3 billion pound ($1.8 billion) Rampion offshore wind park off

($1 = 0.8112 euros)

($1 = 0.7204 pounds)

(Additional reporting by Vera Eckert; Editing by Maria Sheahan/Louise Heavens/Alexander Smith)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, March 13 2018. 15:18 IST