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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) disciplined investments in infrastructure projects and focus on renewable expansion will act as growth catalysts.

This Zacks Rank #2 (Buy) firm is a promising bet at the moment, as it is focusing on renewable expansion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

Growth Projections

The Zacks Consensus Estimate for 2020 earnings is pegged at $2.80 on revenues of $12.49 billion. The bottom-line figure suggests an increase of 8.38% on a year-over-year basis. The top line calls for a rise of 6.06% from the year-ago quarter’s reported figures.

The Zacks Consensus Estimate for 2021 earnings is pegged at $2.98 on revenues of $13 billion. The bottom-line figure suggests an increase of 6.32% on a year-over-year basis. The top line calls for a rise of 4.06% from the year-ago quarter’s reported figures.

The company’s long-term (three to five years) earnings growth rate is pegged at 6%.

Price Performance

In the past 12 months, Xcel Energy's shares have increased 2.7% against the industry's decline of 9.8%.



Dividend Payment

Xcel Energy continues to invest substantially in its utility assets to provide reliable services to customers and effectively meet rising electricity demand. It expects to deliver 2020 earnings in the range of $2.73-$2.83 per share, in line with its long-term earnings growth objective of 5-7%. It targets a dividend payout ratio of 60-70% and aims to increase shareholders’ value by increasing dividend rate by 5-7% annually.

Currently, the company has a dividend yield of 2.80% compared with the Zacks S&P 500 composite’s 2.66%.

Renewable Focus

Xcel Energy is focusing on clean energy transition. The company has almost 2,000 MWs of wind projects under construction, which are expected to be completed in 2020. These projects will enable the company to achieve its goal in reducing carbon emission. In 2019, the company estimated that it reduced carbon emission by more than 40% from 2005 levels. The company is on track to achieve an 80% carbon reduction by 2030 and 100% carbon-free electricity by 2050.

Stocks to Consider

A few better-ranked stocks from the same industry are Pacific Gas & Electric Co. (PCG - Free Report) , NorthWestern Corporation (NWE - Free Report) and Duke Energy Corporation (DUK - Free Report) . NorthWestern sports a Zacks Rank #1, while NorthWestern and Duke Energy hold a Zacks Rank #2 (Buy).

Long-term earnings growth of Pacific Gas & Electric, NorthWestern and Duke Energy is pegged at 2.50%, 3.10% and 4.70%, respectively.

Pacific Gas & Electric, NorthWestern and Duke Energy have trailing four-quarter positive earnings surprise of 7.35%, 7.62% and 6.53%, on average, respectively.

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