uploads/2018/02/XEL-stk-3-1.jpg

What’s Expected to Drive Xcel Energy’s Dividends

By

Updated

Dividend outlook

Let’s discuss what could affect Xcel Energy’s (XEL) dividends. Xcel Energy aims to increase its long-term per-share earnings by 5%–6%, bringing its targeted per-share dividend growth to similar levels.

Xcel Energy’s increased focus on expanding its renewables capacity and multiyear rate plans could boost its earnings over a longer term. Xcel Energy is planning to invest ~$20 billion through 2020, which is expected to increase its rate base by ~6%, compounded annually.

XEL stk

Article continues below advertisement

Market performance

The chart above compares Xcel Energy and peers’ stock price movements, along with broader markets. In the last year, Xcel Energy stock has gained ~3%, while broader utilities (XLU) (IDU) have fallen 3%.

Let’s consider Xcel Energy’s total returns. Xcel Energy has returned 6% while broader utilities have returned ~1% in the last year. Xcel Energy has returned 12%, compounded annually, in the last five years, while peers have returned 10% on average. Broader markets have returned almost 15%. Total returns consider stock appreciation and dividends paid.

It should be noted that while Xcel Energy’s dividend growth has been healthy, market performance has been a major contributor to its total returns in the last five years. For more about utilities’ recent performance and their outlook, read Utilities’ Recent Performance, Volatility Trends, and Charts.

Advertisement

More From Market Realist