Pennsylvania-based PPL Corporation (PPL) stock has fallen more than 20% in the last three months. Its dividend yield consequently rose significantly. It’s currently trading at a dividend yield of 6% compared to its peers’ (XLU) (IDU) average yield of 4.3%.
Although PPL is trading at a superior dividend yield compared to its peers, its dividend growth rate in the last few years was on the lower side. Its per-share dividends rose 1.8% compounded annually in the last five years. In comparison, Xcel Energy (XEL) is currently trading at a dividend yield of 3.4%. In the last five years, Xcel raised its per-share dividends by almost 6% compounded annually.
PPL’s management expects an annual earnings growth of 5%–6% through 2020, which will likely facilitate its dividend growth. PPL’s operations in the United Kingdom contribute more than half of its consolidated earnings. Its business mix improved in the last few years. Its risky merchant generation business separated, and it became a pure-play regulated utility.
Analysts’ price targets
PPL offers an estimated upside of nearly 20% for the next year. Wall Street analysts have given it a mean price target of $32.70 against its current market price of $27.30.
Of the 15 analysts covering PPL, eight of them have rated it a “hold,” and two have rated it a “strong buy.” Four have recommended a “buy,” and one has rated it a “sell” as of March 22, 2018.