Energy Developments Limited raises dividend 155%: Are you missing a great opportunity?

Energy Developments Limited (ASX:ENE) has released a credible result and the yield is enticing.

a woman

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Despite boasting a market capitalisation of $850 million, remote energy and clean energy provider Energy Developments Limited (ASX: ENE) doesn't really seem to garner much attention from investors.

That may change if the company continues to report solid results like the full-year results released this week and particularly if it continues to boost its pay-outs.

Here's how the results looked for the 2014 financial year:

  • Revenue increased by 5% to $423 million
  • Net profit declined 17% to $45.4 million
  • Free cash flow fell $4 million to $103 million
  • Return on equity slipped 5.4% to 13.5%
  • Installed capacity increased by 19% to 883 MW
  • Generation increased 5% to 3,727 GWh

The important aspect to realise when assessing Energy Developments is that the company is continuing to expand and grow its capacity. This has led to a $139 million capital expenditure on growth over the course of the year. In fact over the course of the past five years, the firm has spent over $500 million to boost capacity by 283 MW.

With bespoke operations supporting the remote energy needs of customers across Australia including BHP Billiton Limited (ASX: BHP), Energy Developments provides important niche expertise and services to its customer base. The increased capacity is expected to flow through to higher earnings according to management's guidance for FY 2015.

As management stated: "The company's strong result, cash flow and well executed growth in FY14 have provided the confidence to declare a significant step up in the FY14 ordinary dividend which will be fully franked."

At the current share price, that dividend equates to a fully franked yield of 5.5% which appears incredibly good considering this business is first and foremost meant to be a growth stock.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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