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4 Reasons to Add Ameren (AEE) to Your Portfolio Right Now

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Ameren Corporation’s AEE ongoing investments to strengthen infrastructure and add more renewable assets to the generation portfolio and its focus on organic projects are expected to drive its performance over the long run.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projection & Surprise History

The Zacks Consensus Estimate for Ameren’s 2022 earnings has moved up by 0.5% in the past 60 days to $4.05 per share. The Zacks Consensus Estimate for AEE’s 2023 earnings has moved up by 1.2% in the past 60 days to $4.34 per share.

Ameren’s long-term (three to five years) earnings growth is projected at 7.2%.

Ameren delivered an average earnings surprise of 3.9% in the last four quarters.

Dividend

Ameren has a long history of dividend payments and has paid dividends to shareholders consecutively since 1998. AEE continues to target a dividend payout ratio of nearly 55% to 70% of its adjusted earnings. The new dividend for 2022 is $2.36 per share, which represents an annualized increase of 7.3% over the previous dividend of $2.2 per share.

Currently, Ameren has a dividend yield of 2.4% compared with the Zacks S&P 500 composite's average of 1.5%.

Stable Investments & Emissions Reduction

Ameren’s growth has been led by the company’s systematic and consistent investments in growth projects and infrastructure upgrades. During the 2022-2026 period, Ameren expects to spend $17.3 billion, up 1.2% from the earlier five-year investment plan. Further, Ameren projects a solid pipeline of regulated infrastructure investments of more than $45 billion in the 2022-2031 period. These investments are aimed at supporting overall system reliability, environmental compliance and electric and natural gas utility infrastructure improvements. Such a notable investment strategy will boost AEE’s future growth prospects.

In renewables, Ameren plans to offer electricity through the cleaner and more diverse sources of energy generation, including solar, wind, natural gas, hydro and nuclear power. Ameren targets to expand its renewables portfolio by adding 2,400 megawatts of renewable generation by the end of 2030. Ameren is also closing its coal-fired plants to reduce carbon dioxide emissions and promote green energy. These initiatives will enable Ameren to duly reduce its carbon emissions as planned by 50% by 2030, 85% by 2040 and net-zero by 2050.

Return on Equity

Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, Ameren’s ROE is 10.3%, higher than the industry average of 9.3%. This indicates that the company is utilizing the funds more effectively than industry peers.

Price Performance

In the past six months, Ameren’s stock has rallied 18.9% compared with the industry’s 16.6% growth.

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Zacks Investment Research


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Other Stocks to Consider

Some other similar-ranked stocks from the same industry include Consolidated Edison ED, OGE Energy OGE and WEC Energy Group WEC.

The long-term earnings growth of Consolidated Edison, OGE Energy and WEC Energy is projected at 2%, 3.5% and 6%, respectively.

Consolidated Edison, OGE Energy and WEC Energy delivered an average earnings surprise of 1.4%, 24.1% and 9.1%, respectively, in the last four quarters.

In the past three months, ED, OGE and WEC shares have surged 17.7%, 11.1% and 9.2%, respectively.


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Ameren Corporation (AEE) : Free Stock Analysis Report

Consolidated Edison Inc (ED) : Free Stock Analysis Report

OGE Energy Corporation (OGE) : Free Stock Analysis Report

WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report

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