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Top to Bottom: Analyzing Xcel Energy's Dividend Profile

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Top to Bottom: Analyzing Xcel Energy's Dividend Profile PART 1 OF 4

Xcel Energy’s Dividend Profile Is Attractive despite Lower Yield

Xcel Energy’s dividends

At $22 billion, Xcel Energy (XEL) has a strong dividend profile that outshines many of its peers. It increased its quarterly dividends from $0.34 to $0.36 per share in 1Q17. It implies an annualized dividend payout of $1.44 per share in 2017—nearly 6% growth annually compared to 2016.

The ex-date for Xcel Energy’s 1Q17 dividend is March 13. It will be paid on April 20, 2017.

Xcel Energy’s Dividend Profile Is Attractive despite Lower Yield

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Currently, Xcel Energy is trading at a dividend yield of 3.3%. Although it isn’t the best in the industry, Xcel Energy’s dividends have been stable. Its dividend growth has been healthy. In comparison, the Utilities Select Sector SPDR (XLU) trades at a yield of 3.5%.

Utility giants such as Duke Energy (DUK) and Southern Company (SO) are trading at a dividend yield of 4.2% and 4.4%, respectively, while NextEra Energy is (NEE) at 3%. Broader markets (SPY) (SPX-INDEX) have a dividend yield of 2%.

Above average dividend growth

In the last five years, Xcel Energy’s per share dividends grew 5.5% compounded annually. On the other hand, the dividend growth rate in the last five years for utilities at large stayed close to 4%.

Xcel Energy’s almost entirely regulated operations bode well for relatively stable earnings, which effectively drives the company’s stable dividends. Xcel Energy estimates its long-term per share earnings growth of 4%–6%, which seems to be in line with the industry average. Later in this series, we’ll discuss some more factors that could drive Xcel Energy’s dividends.

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