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4 Reasons to Add ALLETE (ALE) to Your Portfolio Right Now
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ALLETE Inc.’s (ALE - Free Report) strategic capital investment plans, improving earnings estimates and steady dividend payment make a strong case for investment in this utility stock. ALLETE is engaged in providing clean energy to its customers.
The long-term (three to five years) earnings growth rate of ALLETE is currently pegged at 8.7%. Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projection
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved up by 15.2% and 7.4%, year-over-year, respectively. The revenue estimate of $1.52 billion for 2022 implies year-over-year growth of 6.9%. For 2023, revenues are expected to be $1.53 billion, suggesting year-over-year growth of 1%.
Investments
ALLETE plans to make investments of $1.8 billion during 2022-2026. The strategic investments are directed to strengthen its existing infrastructure and boost its clean energy production plans.
ALLETE will fund the capital requirement from a combination of internally generated funds, debt and equity issuance proceeds.
Dividend
ALLETE has a long history of dividend payments and has paid dividends to its shareholders every year since 1950. ALLETE aims to increase its dividend rate annually in the range of 5-7%, subject to the approval of its board of directors. ALLETE has raised dividend annually for the last 10 years. ALLETE’s current annual dividend of $2.60 per share reflects an increase of 46.1% from $1.78 per share paid in 2011.
ALLETE’s long-term dividend payout ratio target is 60-70%. Currently, ALLETE has a dividend yield of 4.2% compared with the industry’s 3.01%.
Debt Position
The debt to capital of ALLETE at the end of the first quarter was 34.7% compared with the industry average of 53.7%. It indicates that the company is using comparatively lower debts to manage its business compared with its peers.
Times interest earned (“TIE”) ratio of ALE at first-quarter 2022 end was 2.7. The strong TIE ratio reflects the companies’ financial strength and their ability to meet their debt obligations.
Price Performance
In the past month, the stock has risen 5.3% compared with the industry’s 6.1% rally.
Image Source: Zacks Investment Research
Other Stocks to Consider
Other stocks in the Zacks Utilities sector that investors can consider include American Electric Power (AEP - Free Report) , DTE Energy (DTE - Free Report) and Hawaiian Electric Industries (HE - Free Report) , each carrying a Zacks Rank #2 currently.
The long-term earnings growth of American Electric Power, DTE Energy and Hawaiian Electric Industries is projected at 6.2%, 6% and 3.2%, respectively.
American Electric Power, DTE Energy and Hawaiian Electric Industries’ current dividend yield of 3%, 2.6% and 3.2% is better than the Zacks S&P 500 composite’s average of 1.5%.
AEP, DTE and HE delivered an average earnings surprise of 2.4%, 8.9% and 30.8%, respectively, in the last four quarters.
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4 Reasons to Add ALLETE (ALE) to Your Portfolio Right Now
ALLETE Inc.’s (ALE - Free Report) strategic capital investment plans, improving earnings estimates and steady dividend payment make a strong case for investment in this utility stock. ALLETE is engaged in providing clean energy to its customers.
The long-term (three to five years) earnings growth rate of ALLETE is currently pegged at 8.7%. Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projection
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved up by 15.2% and 7.4%, year-over-year, respectively. The revenue estimate of $1.52 billion for 2022 implies year-over-year growth of 6.9%. For 2023, revenues are expected to be $1.53 billion, suggesting year-over-year growth of 1%.
Investments
ALLETE plans to make investments of $1.8 billion during 2022-2026. The strategic investments are directed to strengthen its existing infrastructure and boost its clean energy production plans.
ALLETE will fund the capital requirement from a combination of internally generated funds, debt and equity issuance proceeds.
Dividend
ALLETE has a long history of dividend payments and has paid dividends to its shareholders every year since 1950. ALLETE aims to increase its dividend rate annually in the range of 5-7%, subject to the approval of its board of directors. ALLETE has raised dividend annually for the last 10 years. ALLETE’s current annual dividend of $2.60 per share reflects an increase of 46.1% from $1.78 per share paid in 2011.
ALLETE’s long-term dividend payout ratio target is 60-70%. Currently, ALLETE has a dividend yield of 4.2% compared with the industry’s 3.01%.
Debt Position
The debt to capital of ALLETE at the end of the first quarter was 34.7% compared with the industry average of 53.7%. It indicates that the company is using comparatively lower debts to manage its business compared with its peers.
Times interest earned (“TIE”) ratio of ALE at first-quarter 2022 end was 2.7. The strong TIE ratio reflects the companies’ financial strength and their ability to meet their debt obligations.
Price Performance
In the past month, the stock has risen 5.3% compared with the industry’s 6.1% rally.
Image Source: Zacks Investment Research
Other Stocks to Consider
Other stocks in the Zacks Utilities sector that investors can consider include American Electric Power (AEP - Free Report) , DTE Energy (DTE - Free Report) and Hawaiian Electric Industries (HE - Free Report) , each carrying a Zacks Rank #2 currently.
The long-term earnings growth of American Electric Power, DTE Energy and Hawaiian Electric Industries is projected at 6.2%, 6% and 3.2%, respectively.
American Electric Power, DTE Energy and Hawaiian Electric Industries’ current dividend yield of 3%, 2.6% and 3.2% is better than the Zacks S&P 500 composite’s average of 1.5%.
AEP, DTE and HE delivered an average earnings surprise of 2.4%, 8.9% and 30.8%, respectively, in the last four quarters.