Here's Why You Should Add NiSource (NI) to Your Portfolio
NiSource Inc.’s NI consistent investments to strengthen its existing infrastructure, stable returns from regulated assets and focus on clean energy are expected to drive its performance. NiSource continues its cost-saving initiatives and expects to lower operation and maintenance expenses. In 2023, it anticipates its capital expenditure to be in the $3.3-$3.6 billion range. Given its strong dividend history and growth opportunities, NiSource makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projections & Long-term Earnings Growth
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 0.6% in the past 60 days to $1.55. This implies a year-over-year increase of 5.44%.
Long-term (three- to five-year) earnings growth of NiSource is pegged at 6.82%. It had delivered an average earnings surprise of 0.18% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, NiSource’ ROE is 11.13%, higher than the industry’s average of 6.14%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility electric power industry.
Dividend Growth
NiSource has been rewarding its shareholders for 34 years. It has increased its dividend seven times on a year-over-year basis over the last seven years. Its current dividend yield is 3.61%, better than the Zacks S&P 500 composite’s yield of 1.6%. Recently, the company’s board of directors approved a 6.4% quarterly dividend hike to 25 cents from 23.5 cents. This increase has resulted in annualized dividend of $1 per share, from 94 cents per share. At present, its dividend payout is 68%, which is a 4% increase from the previous year.
Systematic Investments & Customer Growth
NiSource plans to further enhance the reliability of natural gas and electric operations by investing $30 billion in 2023-2032 time period. It has $3 billion of planned renewable investments through 2023. These investments and renewable projects will improve the company’s clean power generation portfolio.
The company’s Gas Distribution segment added 22,153 new customers in 2022, compared with 16,436 in 2021. The Electric segment added 2,653 new customers in 2022, compared with 4,115 in 2021.
Price Performance
In the past month, the NiSource stock has returned 1.5% against the industry’s average 3.6% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are CenterPoint Energy, Inc. CNP, Xcel Energy, Inc. XEL and Ameren Corporation AEE, each holding a Zacks Rank #2 at present.
CenterPoint Energy’s long-term (three- to five-year) earnings growth is pegged at 6%. The Zacks Consensus Estimate for 2023 earnings per share (EPS) is $1.49, implying a year-over-year increase of 7.97%.
Xcel Energy’s long-term earnings growth is pegged at 6.62%. The Zacks Consensus Estimate for 2023 EPS is $3.37, implying a year-over-year increase of 6.31%.
Ameren’s long-term earnings growth is pegged at 6.86%. The Zacks Consensus Estimate for 2023 EPS is $4.35, implying a year-over-year increase of 5.07%.
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Ameren Corporation (AEE) : Free Stock Analysis Report
Xcel Energy Inc. (XEL) : Free Stock Analysis Report
NiSource, Inc (NI) : Free Stock Analysis Report
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