Xcel Energy Inc's Dividend Analysis
Unveiling the Dividend Profile of Xcel Energy Inc
Xcel Energy Inc (NASDAQ:XEL) recently announced a dividend of $0.52 per share, payable on 2024-01-20, with the ex-dividend date set for 2023-12-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Xcel Energy Inc's dividend performance and assess its sustainability.
What Does Xcel Energy Inc Do?
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Xcel Energy manages utilities serving 3.7 million electric customers and 2.1 million natural gas customers in eight states. Its utilities are Northern States Power, which serves customers in Minnesota, North Dakota, South Dakota, Wisconsin, and Michigan; Public Service Company of Colorado; and Southwestern Public Service Company, which serves customers in Texas and New Mexico. It is one of the largest renewable energy owners and suppliers in the U.S. with half of its electricity sales coming from carbon-free energy.
A Glimpse at Xcel Energy Inc's Dividend History
Xcel Energy Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis.
Xcel Energy Inc has increased its dividend each year since 2003. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 20 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Xcel Energy Inc's Dividend Yield and Growth
As of today, Xcel Energy Inc currently has a 12-month trailing dividend yield of 3.30% and a 12-month forward dividend yield of 3.35%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Xcel Energy Inc's annual dividend growth rate was 6.40%. Extended to a five-year horizon, this rate decreased to 6.30% per year. And over the past decade, Xcel Energy Inc's annual dividends per share growth rate stands at 6.20%.
Based on Xcel Energy Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Xcel Energy Inc stock as of today is approximately 4.48%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Xcel Energy Inc's dividend payout ratio is 0.65.
Xcel Energy Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Xcel Energy Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Xcel Energy Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Xcel Energy Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Xcel Energy Inc's revenue has increased by approximately 8.10% per year on average, a rate that underperforms approximately 50.1% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Xcel Energy Inc's earnings increased by approximately 8.80% per year on average, a rate that underperforms approximately 37.99% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.00%, which underperforms approximately 43.18% of global competitors.
Next Steps
In conclusion, Xcel Energy Inc's consistent dividend payments, coupled with its history as a dividend achiever, position it as a potentially attractive stock for value investors seeking steady income. The company's payout ratio and profitability rank indicate a sustainable dividend policy. However, while Xcel Energy Inc's growth metrics present a good trajectory, they suggest there may be room for improvement when compared to global competitors. Investors should weigh these factors, considering both the stability of dividends and the potential for growth. For those seeking additional investment opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
