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Here's Why You Should Add Xcel Energy (XEL) to Your Portfolio

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Xcel Energy Inc.’s (XEL - Free Report) earnings estimatesfor 2019 and 2020 have moved up 6.07% and 6.48% on a year-over-year basis to $2.62 and $2.79 per share, respectively. Sales estimatesfor 2019 and 2020 have moved up 5.19% and 3.88% on a year-over-year basis to $12.14 billion and $12.61 billion, respectively.

Let’s discuss the factors that make the stock an appropriate investment option at the moment.

Zacks Rank & Earnings Surprise History

Xcel Energy currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s average four-quarter positive earnings surprise is 2.15%.

Price Movement

Shares of the company have gained on a long-term basis. In the past five years, the stock has surged 91.8% compared with the industry’s rise of 14.6%.

Long-Term Growth & Dividend Yield

The company’s long-term (three to five years) earnings growth is pegged at 5.61%.

Xcel Energy targets a dividend pay-out ratio of 60-70%. Moreover, it aims to boost shareholders’ value by increasing dividend rate by 5-7% annually. Currently, the company has a dividend yield of 2.67% compared with the Zacks S&P 500 composite’s 1.88%.

Long-Term Plans

Xcel Energy continues to invest substantially in utility assets to provide reliable services to customers and effectively cater to rising demand for electricity. The company’s capital investment is directed toward transmission, distribution, electric generation and renewable projects. For 2019, it is well positioned to generate earnings in the range of $2.55-$2.65 per share, up 5-7% earnings. Moreover, the company is focusing on the steel-for-fuel initiative that enables the addition of renewables and lowers bills.The company is also focusing to reduce carbon emission. It is the first utility in the United States to announce a target of 80% carbon reduction by 2030 from 2005 level. In the long run, the company expects to deliver 100% carbon free energy by 2050.

Other Key Picks

Some other top-ranked stocks from the same industry are NiSource, Inc (NI - Free Report) , DTE Energy Company (DTE - Free Report) and Hawaiian Electric Industries, Inc. (HE - Free Report) , each holding a Zacks Rank of 2.

NiSource pulled off an average positive earnings surprise of 13.41% in the last four quarters. The company’s long-term earnings growth is pegged at 5.90%.

DTE Energy pulled off an average positive earnings surprise of 12.24% in the last four quarters. The company’s long-term earnings growth is pegged at 6%.

Hawaiian Electric Industries delivered an average positive earnings surprise of 0.05% in the last four quarters. The company’s long-term earnings growth is pegged at 5.60%.

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