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MDU Resources' (MDU) 5-Year Capex to Focus on Energy Delivery

MDU Resources MDU announced a $2.8 billion capital expenditure plan for the next five years, from 2024 through 2028. The strategic capital investments will be focused on strengthening the company’s regulated energy delivery businesses.

These investments are in sync with MDU Resources’ long-term plan as the company intends to become a pure-play regulated energy delivery business consisting of electric and natural gas utilities and a natural gas pipeline business.

Details of the Expenditure

MDU Resources intends to change the nature of its operation. Thus, it is critical to strengthen the primary operation of the company further. MDU Resources plans to increase investments in its electric and natural gas utilities by 44% over the next five years compared with 2019-23.

The new five-year investment plan will aim to invest $2,760 million in the electric and natural gas delivery operations compared with $2,410 million planned in the 2019-2023 period.

Benefits From Spending

MDU Resources anticipates that the customer base of electric and natural gas utilities will grow at a rate of 1-2% annually over the next five years. Given the expansion of its customer base and rising demand for its services, strategic investments will increase the reliability of its services and enable it to serve an increasingly large customer base effectively.

Investment in pipelines will primarily support organic ventures like the recently announced Jamestown-to-Ellendale 345-kilovolt transmission project and the Wahpeton Expansion project in North Dakota. These projects will further strengthen MDU’s electric and natural gas transmission capabilities.

MDU Resources' planned capital investments in the pipeline business will focus on system growth to expand natural gas transmission capacity. A number of projects are included in the planned investments, including the Wahpeton Expansion project, which is expected to be constructed in 2024. Courtesy of the expansion of infrastructure, the company will be able to serve an expanding customer base.

Price Performance

In the past month, shares of MDU Resources have gained 2.1% compared with the industry’s 2.7% growth.

 

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Key Picks

MDU Resources currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include NiSource Inc. NI, SJW Group SJW and The York Water Company YORW, each currently holding a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

NiSource, SJW Group and The York Water Company’s dividend yield are currently pegged at 3.8%, 2.4%, and 2.2%, respectively, better than the Zacks S&P 500 Composite’s yield of 1.7%.

The Zacks Consensus Estimate for 2023 earnings for NiSource, SJW Group and The York Water Company has moved up 1.7%, 2.8%, and 3.9%, respectively, in the past 60 days.

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NiSource, Inc (NI) : Free Stock Analysis Report

The York Water Company (YORW) : Free Stock Analysis Report

MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report

SJW Group (SJW) : Free Stock Analysis Report

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