Reasons to Add ALLETE (ALE) to Your Portfolio Right Now
ALLETE Inc.’s ALE strategic capital investment plans, improving earnings estimates and steady dividend payments make it a strong case for investment. ALE is engaged in providing clean energy to its customers.
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 & Long-term EPS Growth
The Zacks Consensus Estimate for 2023 earnings has moved up by 17.9% to $4.34 in the past 60 days. The Zacks Consensus Estimate for 2024 earnings has moved up by 0.7% in the last 60 days to $4.14.
The revenue estimate of $1.92 billion for 2023 implies year-over-year growth of 22.9%. For 2024, revenues are expected to be $1.99 billion, suggesting year-over-year growth of 3.5%.
ALLETE’s long-term (three- to five-year) earnings growth rate is currently pegged at 9.3%.
Dividend & Long-term EPS Growth
ALE has a long history of dividend payments and has paid dividends to its shareholders every year since 1950. It aims to increase its dividend rate annually in the range of 5-7%, subject to the approval of its board of directors. ALLETE has raised its dividend annually for the last 11 years. Its current annual dividend of $2.71 per share reflects an increase of 52.3% from $1.78 per share paid in 2011.
ALE’s long-term dividend payout ratio target is 60-70%. Currently, it has a dividend yield of 4.49% compared with the industry’s 3.57%.
Debt Position
The company's debt-to-capital ratio at the end of the third quarter was 33.2% compared with the industry’s average of 54.7%. This indicates that ALE is using lower debt to manage its business compared with its peers.
The times interest earned (“TIE”) ratio of the company at the end of third-quarter 2023 end was 3.4. The strong TIE ratio reflects the company’s financial strength and its ability to meet interest obligations.
Investments
ALLETE plans to make investments of $3.1 billion during the 2023-2027 time period. The strategic investments are directed to strengthen its existing infrastructure and boost its clean energy production plans.
Price Performance
In the last three months, the stock has risen 9.1% against the industry’s 4.7% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Other top-ranked stocks in the Utilities sector include Sempra Energy SRE, NiSource NI and Global Water Resources GWRS, each currently carrying a Zacks Rank #2.
Sempra Energy, NiSource and Global Water Resources delivered an average earnings surprise of 9.03%, 5.59% and 27.8%, respectively, in the last four quarters.
The Zacks Consensus Estimate for 2023 earnings for Sempra Energy, NiSource and Global Water Resources has moved 0.9%, 1.3% and 7.4% upward, respectively, in the last 60 days.
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NiSource, Inc (NI) : Free Stock Analysis Report
Sempra Energy (SRE) : Free Stock Analysis Report
Allete, Inc. (ALE) : Free Stock Analysis Report
Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report
