Xcel Energy Inc.’s XEL long-term investment plans should further increase the safety and reliability of its electric distribution and transmission systems. An increase in demand due to consistent customer growth and addition of more renewable sources to produce electricity will boost its performance. Given its growth opportunities, XEL makes for a solid investment option in the utility sector.

Let us focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

XEL Stock’s Growth Projections & Surprise History

The Zacks Consensus Estimate for 2025 earnings per share (EPS) indicates year-over-year growth of 7.95%.

The Zacks Consensus Estimate for 2025 sales is pinned at $15.23 billion, implying a year-over-year increase of 7.65%.

The company’s long-term (three to five-year) earnings growth rate is 6.9%. It delivered an average earnings surprise of 0.68% in the trailing four quarters.

XEL’s ROE is Better Than the Industry

XEL’s return on equity (ROE) is better than the industry’s. Return on equity measures how efficiently the company is utilizing its shareholders’ funds to generate profits. XEL’s ROE is 10.76%, which is better than its industry’s 9.73%. This indicates that XEL is utilizing the fund of the company’s shareholders more efficiently to generate returns than its peers.

Dividend History of XEL Stock

XEL’s board of directors increased dividends for 21 consecutive years. Currently, its quarterly dividend is 54.75 cents per share, which resulted in an annualized dividend of $2.19, indicating a 5.3% increase from the previous year's level. The company's current dividend yield is 3.28%, better than the Zacks S&P 500 composite's 1.51%.

Xcel Energy targets a dividend payout ratio of 50-60% and aims to increase its shareholder value by raising 4-6% of the dividend rate annually, subject to approval from the company’s board. The strong cash flow generation capacity of the company enables it to pay dividends and raise the same at regular intervals.

XEL’s Systematic Investments

Xcel Energy continues to invest substantially in its utility assets to provide reliable services to the company’s customers and effectively meet rising electricity demand. It aims to spend $45 billion during the 2025-2029 period.

The investment plan includes nearly $28.4 billion for strengthening its electric distribution and transmission operations during 2025-2029. Nearly $5 billion will be invested in renewables during the said time frame. Xcel Energy has increased its expectation of long-term EPS growth in the range of 6-8% compared with the previous prediction of 5-7%. The increase in the EPS growth rate estimation indicates XEL’s significant investments.

XEL Stock’s Price Performance

In the past six months, Xcel Energy’s shares have risen 19.7% compared with the industry’s 3% growth.

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Other Stocks to Consider

A few other top-ranked stocks from the same sector are Vistra Corp. VST, New Jersey Resources NJR and NiSource NI. NJR sports a Zacks Rank #1 (Strong Buy), while VST and NI each holds a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

VST’s long-term (three to five years) earnings growth rate is 17.4%. The Zacks Consensus Estimate for 2025 earnings per share indicates an increase of 7.7% in the past 60 days.

The Zacks Consensus Estimate for NJR’s fiscal 2025 EPS indicates an increase of 7.3% in the past 60 days. The Zacks Consensus Estimate for NJR’s fiscal 2025 sales indicates an increase of 2.52% from the previous year’s registered figure.
 
NI’s long-term earnings growth rate is 7.45%. The Zacks Consensus Estimate for 2025 EPS indicates an increase of 0.5% in the past 60 days. NI reported an average surprise of 22.43% in the last four quarters.

 

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