Reasons to Add OGE Energy (OGE) to Your Portfolio Right Now
OGE Energy Corp. OGE, an electricity and natural gas-providing company, has a solid investment plan over the next four years to maintain and upgrade the infrastructure. The company will benefit from a stable financial position and regular dividend payments.
Let’s explore the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
OGE’s long-term (three to five-year) earnings growth rate is pegged at 3.7%.
The Zacks Consensus Estimate for OGE’s 2023 earnings per share (EPS) has moved up 0.5% in the past 60 days.
The Zacks Consensus Estimate for 2024 EPS has moved up 0.9% in the past 60 days.
The stock delivered an average earnings surprise of 8.26% in the previous four quarters.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, OGE Energy’s ROE is 9.47%, which is higher than the industry’s average of 6.92%. This indicates that the company has been utilizing its funds more effectively than its peers in the electric power utility industry.
Debt Position
At the end of third-quarter 2023, OGE’s total debt to capital was 51.13%, better than the industry’s average of 59.13%.
The time-to-interest earned ratio at the end of the third quarter of 2023 was 3.29. The ratio, being greater than one, reflects OGE Energy’s ability to meet future interest obligations without difficulties.
Dividend History
OGE Energy has been consistently paying dividends to its shareholders. With a quarterly dividend of 41.82 cents, the annualized dividend stands at $1.67 per share. OGE expects its dividend payout ratio to be between 65% and 70% of annual earnings over the next few years.
OGE’s current dividend yield is 4.75%, better than the Zacks S&P 500 Composite’s 1.42%.
Systematic Investments
For 2023, OG&E has allocated $950 million, out of which $720 million is for strengthening its transmission, distribution and grid expansion operations. During the 2023-2027 period, the company expects to spend up to $4.75 billion. Such solid capital deployment plans are expected to lead to a long-term earnings growth of 5-7%.
Price Performance
In the past three months, shares of OGE have gained 0.9% against the broader industry’s 3.6% decline.
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Other Stocks to Consider
A few other top-ranked stocks from the same industry are PPL Corp. PPL, IDACORP Inc. IDA and ALLETE Inc. ALE. Each stock presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
PPL’s long-term earnings growth rate is 7.4%. The Zacks Consensus Estimate for 2023 sales indicates an increase of 1.2% from that recorded in 2022.
IDA’s long-term earnings growth rate is 4.1%. The Zacks Consensus Estimate for 2023 sales implies an improvement of 8.5% from that recorded in 2022.
ALE’s long-term earnings growth rate is 8.1%. The Zacks Consensus Estimate for 2023 sales implies an improvement of 22.3% from that recorded in 2022.
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