Reasons to Add Xcel Energy (XEL) to Your Portfolio Right Now
Xcel Energy, Inc. XEL continues to benefit from its investment to strengthen infrastructure and clean power generation. The company’s expanding customer base and rising demand for electricity act as tailwinds. Given its growth opportunities, Xcel Energy is 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 option at the moment.
Growth Projections
The Zacks Consensus Estimate for XEL’s 2023 earnings per share (EPS) has increased 0.3% to $3.35 in the past seven days.
The consensus estimate for XEL’s 2024 EPS has also increased 0.3% to $3.58 in the past 30 days.
Xcel Energy’s long-term (three to five-year) earnings growth rate is 6.5%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns.
Currently, Xcel Energy’s ROE is 10.39%, which is higher than the industry’s average of 5.43%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Debt Position
Currently, XEL’s total debt to capital is 60.23%, better than the industry’s average of 62.16%.
The time-to-interest earned ratio at the end of second-quarter 2023 was 2.6. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
The utility company has been consistently paying dividends to its shareholders. XEL’s board of directors increased dividends in February 2023 for the 19th consecutive year. Currently, the company’s quarterly dividend is 52 cents per share. This results in an annualized dividend of $2.08 per share, up 6.7% from the previous year’s dividend of $1.95 per share.
Xcel Energy’s current dividend yield is 3.58%, better than the Zacks S&P 500 Composite’s 1.47%.
Systematic Investments
Xcel Energy continues to invest substantially in its utility assets to provide reliable services to its customers and effectively meet the rising electricity demand. It currently aims to spend $29.5 billion during 2023-2027. The company plans to invest nearly $18 billion in strengthening its electric distribution and transmission operations in the 2023 -2027 time period. Nearly $1 billion will be invested to strengthen its renewable power generation operations in the same time frame.
Price Performance
In the past month, XEL’s shares have risen 2.8% against the industry’s 11% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Vistra Corp. VST, which currently sports a Zacks Rank #1 (Strong Buy), and Avangrid Inc. AGR and OGE Energy Corp. OGE, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VST’s 2023 EPS indicates a year-over-year improvement of 220.4%. The same for sales indicates a year-over-year increase of 47.8%.
AGR’s long-term earnings growth rate is 4.05%. The consensus estimate for the company’s 2023 sales implies year-over-year growth of 6.44%.
OGE’s long-term earnings growth rate is 3.65%. It delivered an average earnings surprise of 3.8% in the last four quarters.
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Xcel Energy Inc. (XEL) : Free Stock Analysis Report
OGE Energy Corporation (OGE) : Free Stock Analysis Report
Avangrid, Inc. (AGR) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
