Reasons to Add DTE Energy (DTE) to Your Portfolio Right Now
DTE Energy Company’s DTE disciplined capital spending program to maintain and upgrade the reliability of its electric utility systems increases its earnings potential. The company’s steady investments to enhance renewable generation assets drive its bottom line. Given its growth opportunities and strong dividend history, DTE makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for DTE’s 2023 earnings per share (EPS) has increased 0.3% to $6.20 in the past 30 days. This indicates a year-over-year bottom-line improvement of 1.6%.
DTE’s long-term (three- to five-year) earnings growth rate is 6%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, DTE’s ROE is 10.6%, higher than the industry’s average of 4.9%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Debt Position
Currently, DTE’s total debt to capital is 21.5%, much better than industry’s average of 58.1%.
The time to interest earned ratio at the end of first-quarter 2023 was 2.7. The ratio, being greater than one, reflects the company’s ability to meet future debt obligations without difficulties.
Dividend History
DTE Energy has been consistently increasing shareholders’ value by paying dividends. Its board of directors approved a 7.6% dividend hike in 2022. Currently, DTE’s quarterly dividend is 95.25 cents per share, resulting in an annualized dividend of $3.81 per share. The company’s current dividend yield is 3.44%, better than the Zacks S&P 500 Composite's average of 1.47%.
Systematic Investments
DTE Energy expects long-term operating earnings growth of 6-8%. DTE Electric currently expects to make capital investments worth $18 billion during 2023-2027. This includes $4 billion for the base infrastructure, $9 billion for the distribution infrastructure and $5 billion for clean energy generation.
DTE Gas’ total capital investments are estimated at $3.6 billion over the 2023-2027 period, which comprises of $2 billion for the base infrastructure and $1.6 billion for gas main renewal, meter move out and pipeline integrity programs.
Price Performance
In the last three months, DTE’s shares have rallied 4.2% compared with the industry’s average growth of 0.6%.
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Other Stocks to Consider
A few other top-ranked stocks from the same industry are NiSource Inc NI, PPL Corporation PPL and OGE Energy Corp. OGE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NiSource’s long-term earnings growth rate is 7%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $1.6, implying a year-over-year increase of 8.8%.
PPL’s long-term earnings growth rate is 7.4%. The consensus estimate for the company’s 2023 EPS is pegged at $1.59, indicating a year-over-year improvement of 12.8%.
OGE Energy’s long-term earnings growth rate is 17.9%. It delivered an average earnings surprise of 19.9% in the last four quarters.
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