2.73% Dividend Yield, 12 Years of Dividend Hikes – A Three‑Segment Minnesota Utility With Plastics and Metal Fabrication Upside
This company doesn’t live on regulated power bills alone: it pairs a rate‑base electric utility with two non‑utility businesses that sell real products into industrial end‑markets. That mix makes the earnings profile more dynamic than a plain utility, because volumes, pricing, and manufacturing efficiency can matter just as much as weather and rate cases. Management even expects a near‑even earnings split in 2026 between the utility and the non‑utility segments, which is a rare statement in a sector that usually wants to look 100% regulated.
Otter Tail (OTTR)
Financial Score: 93 / 99
Quick Tip
To keep your portfolio strong, stay on top of the financials for each company you hold. Solid companies mean better returns, so be sure to check in on their quarterly and annual numbers.Interesting stocks usually score 80+ on the Financial Scale, with top players hitting 90+. If that score dips below 80, it might be a good time to consider cutting ties before things take a turn. Otter Tail Corporation (OTTR) reported results for the quarter and year ended December 31, 2025, with segments in Electric, Manufacturing, and Plastics. For full‑year 2025, consolidated net income was $301.662 million and diluted EPS was $7.17, with segment net income of $90.963 million (Electric), $13.681 million (Manufacturing), $200.747 million (Plastics), and a $(3.729) million corporate net loss. Liquidity was substantial at year‑end: $386.2 million of cash and cash equivalents plus $319.3 million available under credit facilities, totaling $705.5 million.
Dividend engine: low payout, fast 5‑year growth
OTTR’s dividend profile is: 2.73% dividend yield, $2.31 annual dividend, 12 consecutive years of dividend growth, +42.00% 5‑year dividend growth, and a 35.21% payout ratio. That 35.21% payout ratio is the key “buffer,” leaving room for utility capex and cyclicality in Manufacturing and Plastics without forcing dividend math to get tight. The streak and growth rate say the dividend is being treated as a repeatable policy, not a one‑cycle celebration.
Business and reporting: Q4 2025
For Q4 2025, consolidated operating revenues were $303.111 million, operating income was $66.824 million, net income was $54.850 million, and diluted EPS was $1.30. Segment net income in the quarter was $26.4 million (Electric), $2.6 million (Manufacturing), and $30.4 million (Plastics), with corporate net loss of $7.6 million. The company also initiated 2026 diluted EPS guidance of $5.22 to $5.62 and projected return on equity of 11.5% to 12.3% across that range.
Business growth: a $2.05B capex plan and visible rate‑base expansion
The electric growth plan is spelled out: a five‑year capital expenditure plan totals $2.05 billion, and management reaffirmed a 10% compounded annual growth rate in average electric utility rate base over the next five years. The plan’s electric spending mix is heavy on grid and clean resources—Renewable Generation and Storage $645 million, Transmission $855 million, Distribution $268 million, and Other $153 million across the forecast period. For 2026 specifically, management expects Electric segment earnings to increase 14%, driven by a 14% increase in average rate base plus interim Minnesota rate‑case revenues starting January 1, 2026 and anticipated final rates from the South Dakota rate case.
Fun Fact: Named after a river—and it started with hydropower
Otter Tail Power’s name is literal: it was named after the Otter Tail River, which provided the company’s first source of power. The business traces its roots to early hydro development around Fergus Falls, Minnesota, with Otter Tail Power Company incorporated in 1907 and the Dayton Hollow Dam coming online in April 1909. In other words, this “boring utility” started as a very physical, very old‑school infrastructure story—water, a dam, and long‑distance transmission—long before it became a modern public company with regulated rate cases and multi‑segment reporting.
Final Take – Top‑tier score and a wide dividend buffer
OTTR’s dividend snapshot is: 2.73% yield, $2.31 annual dividend, 35.21% payout ratio, 12 years of dividend hikes, and +42.00% 5‑year dividend growth. Full‑year 2025 added substance: $301.662 million net income, $7.17 diluted EPS, $386.0 million cash from operations, $288.1 million capital expenditures, $88.1 million dividend payments, and $705.5 million total available liquidity. Financial Score: 93 — genuinely top‑tier; companies above 90 are typically considered the truly reliable names, and 93 places OTTR in that high‑quality bucket.
Someone’s sitting in the shade today because someone planted a tree a long time ago. ― Warren Buffett.
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