Xcel Energy XEL is poised to benefit from its solid capital investment plan for infrastructure strengthening and clean power generation. Given its growth opportunities, XEL 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.

XEL’s Growth Projections & Surprise History

The Zacks Consensus Estimate for 2024 earnings per share (EPS) is pinned at $3.55, indicating year-over-year growth of 5.97%.

The Zacks Consensus Estimate for 2025 EPS has increased 0.3% to $3.84 in the past 60 days.

Xcel Energy’s long-term (three to five years) earnings growth rate is 6.39%. It delivered an average earnings surprise of 0.7% in the past four quarters.

XEL’s 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 10.95%, higher than the industry’s average of 10.42%. This indicates that XEL has been utilizing its shareholders' funds more constructively (to generate income) than the company’s peers in the electric power utility industry.

XEL’s Solvency

The time-to-interest earned ratio at the end of the second quarter of 2024 was 2.6. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

Xcel Energy’s Dividend Growth

The company has been consistently paying dividends to its shareholders. XEL’s board of directors has increased dividends for 21 consecutive years. Currently, its quarterly dividend is 54.75 cents per share, which has resulted in an annualized dividend of $2.19, indicating a 5.3% increase from the previous year's level. The company's current dividend yield is 3.36%, better than the Zacks S&P 500 composite's 1.24%.

XEL’s Systematic Investments

Xcel Energy continues to invest substantially in the company’s utility assets to provide reliable services to its customers and effectively meet rising electricity demand. It aims to spend $39 billion in the 2024-2028 time period. This includes an investment of $22.1 billion for strengthening its electric distribution and transmission operations and nearly $5.6 billion will be invested in renewables in the said time frame.

XEL’s Stock Price Performance

In the past three months, the stock has returned 22.2% compared with the industry’s growth of 17.4%.

 

Image Source: Zacks Investment Research

Other Stocks to Consider

A few other top-ranked stocks from the same industry are Evergy EVRG, PPL Corporation PPL and WEC Energy WEC, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EVRG’s long-term earnings growth rate is 5.85%. The Zacks Consensus Estimate for 2024 EPS implies an improvement of 8.5% from the bottom line recorded in 2023.

PPL’s long-term earnings growth rate is 6.82%. The Zacks Consensus Estimate for 2024 EPS implies an improvement of 7.5% from the bottom line recorded in 2023.

WEC’s long-term earnings growth rate is 7.98%. The company delivered an average earnings surprise of 4.7% in the trailing four quarters.