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Reasons to Add MDU Resources (MDU) to Your Portfolio Now
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MDU Resources Group Inc.’s (MDU - Free Report) investment plans will improve the reliability of its services. Post the spinoff of Knife River, MDU now primarily focuses on regulated energy delivery. Given its growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased 1.4% to $1.49 in the past 60 days.
The Zacks Consensus Estimate for 2025 EPS is pinned at $1.55 per share, indicating a year-over-year increase of 4.4%.
The company’s long-term (three to five-year) earnings growth rate is 6%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing the funds to generate returns. Currently, MDU Resources’ ROE is 8.84%, higher than the sector’s average of 8.54%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position
Currently, MDU’s total debt to capital is 45.17%, better than the industry’s average of 49.63%.
The time to interest earned ratio at the end of fourth-quarter 2023 was 5.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
Steady earnings generation enables the company to distribute regular dividends to its shareholders. MDU Resources has been paying out dividends for the past 85 years.
After the spinoff of Knife River in August 2023, it declared new quarterly dividends of 12.5 cents per share, resulting in an annualized dividend of 50 cents. The company has set a new dividend payout range of 60-70%. Its current dividend yield is 2.29%, better than the Zacks S&P 500 Composite’s 1.31%.
Systematic Investments
Total capital expenditures for 2023 were $536 million. The company expects its capital expenditures to be $2.8 billion in the 2024-2028 period. These investments will increase the reliability of its services and enable it to effectively serve an increasingly large customer base. The company’s compound annual growth rate target for the next five years is 6-7%.
Price Performance
In the past three months, shares of MDU have risen 15% compared with the broader industry’s growth of 0.5%.
IDACORP’s long-term earnings growth rate is 4.38%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $5.43, indicating year-over-year growth of 5.6%.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for the company’s 2024 EPS is pegged at $1.71, indicating a year-over-year improvement of 6.9%.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $6.70, indicating a year-over-year increase of 16.9%.
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Reasons to Add MDU Resources (MDU) to Your Portfolio Now
MDU Resources Group Inc.’s (MDU - Free Report) investment plans will improve the reliability of its services. Post the spinoff of Knife River, MDU now primarily focuses on regulated energy delivery. Given its growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased 1.4% to $1.49 in the past 60 days.
The Zacks Consensus Estimate for 2025 EPS is pinned at $1.55 per share, indicating a year-over-year increase of 4.4%.
The company’s long-term (three to five-year) earnings growth rate is 6%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing the funds to generate returns. Currently, MDU Resources’ ROE is 8.84%, higher than the sector’s average of 8.54%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position
Currently, MDU’s total debt to capital is 45.17%, better than the industry’s average of 49.63%.
The time to interest earned ratio at the end of fourth-quarter 2023 was 5.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
Steady earnings generation enables the company to distribute regular dividends to its shareholders. MDU Resources has been paying out dividends for the past 85 years.
After the spinoff of Knife River in August 2023, it declared new quarterly dividends of 12.5 cents per share, resulting in an annualized dividend of 50 cents. The company has set a new dividend payout range of 60-70%. Its current dividend yield is 2.29%, better than the Zacks S&P 500 Composite’s 1.31%.
Systematic Investments
Total capital expenditures for 2023 were $536 million. The company expects its capital expenditures to be $2.8 billion in the 2024-2028 period. These investments will increase the reliability of its services and enable it to effectively serve an increasingly large customer base. The company’s compound annual growth rate target for the next five years is 6-7%.
Price Performance
In the past three months, shares of MDU have risen 15% compared with the broader industry’s growth of 0.5%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A couple of other top-ranked stocks from the same sector are IDACORP (IDA - Free Report) , NiSource Inc. (NI - Free Report) and DTE Energy (DTE - Free Report) , both holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDACORP’s long-term earnings growth rate is 4.38%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $5.43, indicating year-over-year growth of 5.6%.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for the company’s 2024 EPS is pegged at $1.71, indicating a year-over-year improvement of 6.9%.
DTE’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for the company’s 2024 EPS is pinned at $6.70, indicating a year-over-year increase of 16.9%.