On Jun 3, 2014, the shares of NRG Energy Inc. (NRG) climbed to its 52-week high of $36.07, primarily on the back of strategic asset acquisitions, renewable portfolio expansion and attractive dividend payment. The share price finally closed at $36.06, up 43.7% from the year-ago closing.
NRG Energy’s asset acquisitions in the first quarter of 2014 set the momentum for the company. The most notable of them was the purchase of Edison Mission Energy (EME), a unit of Edison International (EIX) and Dominion Resources Inc.’s (D) competitive retail business.
In addition, completion of several organic projects like the 720 megawatt (MW) natural gas-fired Marsh Landing facility and the gas turbine combined-cycle generating facility at its El Segundo Power Generating Station further boosted NRG Energy’s growth opportunities.
The company’s investments directed at expanding its renewable asset base were well-timed given the current favorable climate for renewables in the U.S. NRG Energy has timely completed some critical solar projects, including the Borrego Solar Generating Station and the California Valley Solar Ranch, which offered encouraging prospects.
Meanwhile, the company’s strong cash flow position has enabled it to reward its shareholders with consistent dividend payout. On May 1, 2014, NRG Energy paid a quarterly dividend of $0.14 per share, up 16.7% from the previous payout.
The Obama administration recently unveiled its plans to curb carbon emissions from power plants by 30% by 2030 from 2005 levels. These pro-green initiatives will likely offer a stimulus to NRG Energy’s large-scale clean energy investments. The company’s solar portfolio has already surpassed the 1,200 MW mark and has a capacity to serve roughly one million homes.
The company’s strategic acquisition program backed by strong financial position is expected to act as catalysts for its future growth. Currently, NRG Energy carries a Zacks Rank #1 (Strong Buy). Another well-placed utility operator is Black Hills Corp. (BKH). The stock also holds the same rank.
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