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4 Reasons to Add Avista (AVA) to Your Portfolio Right Now

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Avista Corporation AVA operates as an electric and natural gas utility company. It provides electric and natural gas services to 400,000 and 367,000 customers, respectively. More than 90% of its revenues are covered by regulatory mechanisms. The gradual improvement in economic conditions is likely to increase demand and its customer volume. The company is also expected to benefit from electric and natural gas decoupling rates.

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 Projections

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $2.11 and $2.33, respectively. The 2021 and 2022 estimates indicate year-over-year growth of 11.05% and 10.3%, respectively. Estimates for 2021 and 2022 have increased 0.9% and 3.6%, respectively, in the past 60 days.

The Zacks Consensus Estimate for 2021 and 2022 revenues is pegged at $1.35 billion and $1.4 billion, indicating year-over-year growth of 2.1% and 3.8%, respectively.

Regular Dividend Hike & Long-Term Earnings Growth

Currently, the company has a dividend yield of 3.61%, higher than the industry’s 3.15%. It has increased annual dividend rate for five consecutive years. The company’s stable performance ensures an increase in annual dividend payment for shareholders. Its 2021 annual dividend rate of $1.69 per share reflects an increase of 23.4% from the 2016 level of $1.37.

The company’s long-term (three to five years) earnings growth is currently projected at 5.5%.

Regular Investments

Avista makes consistent investments to upgrade and maintain the existing infrastructure as well as expand operations. The company anticipates investing $415 million in 2021 and more than $1.2 billion during the 2021-2023 time period in utility operations. These investments will increase the reliability of its services and enable it to serve an increasing customer base effectively. The company expects this systematic investment to drive 5% annual rate base growth over the long term.

Balance Sheet and Liquidity

Avista had $182 million of available liquidity under a $400-million line of credit as of Apr 30, 2021. Other than the $250-million debt due in 2022, the company does not have any significant debt maturity in the next nine years.

The times interest earned ratio at first quarter-end was 2.6, which improved sequentially by 20 basis points. This ratio of more than 1 indicates that it has enough liquidity to meet near-term obligations.

Price Performance

In the past six months, the stock has gained 20.3% compared with the industry’s growth of 3.8%.

Other Stocks to Consider

Other top-ranked stocks in the same sector include CMS Energy Corporation CMS, NewJersey Resource Corporation NJR and UGI Corporation UGI, currently having a Zacks Rank #2 (Buy).

CMS Energy, NewJersey Resource and UGI Corp. pay regular dividends, thereby ensuring steady income for investors. The current dividend yield of CMS Energy, NewJersey Resource and UGI Corp. is 2.75%, 3.14% and 3.02%, respectively.

The Zacks Consensus Estimate for 2021 earnings for Otter Tail has moved up 1.1% in the past 60 days. Fiscal 2021 earnings estimates for NewJersey Resource and UGI Corp. has moved up 16.8%, and 4.5%, respectively, in the past 60 days.

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