Dividend Increase: Xcel Energy (XEL)

Last week Xcel Energy (XEL) announced their 2017 dividend increase of $0.02 per share.  This brings the quarterly dividend to $0.36 from last years $0.34 per share. Good for a 5.88% increase.  XEL is a boring energy company operating throughout the Midwest and West in a total of 8 states.  This increase marks 14 years straight of dividend increases.  The current dividend yield is 3.32% based on Fridays close of 43.34.  Something I like about XEL is their investor relations site.  It’s clear on their objectives.  Pulled straight from the XEL Investor relations site:

Financial Objectives
• Long-term EPS growth of 4-6%
• Annual dividend increases of 5-7%
• Dividend payout ratio target of 60-70%
• Maintain senior unsecured debt credit ratings in the BBB+ to A range
• Maintain senior secured debt credit ratings in the A range

XEL Dividend History:

As you can see, from 2003-2017, XEL has grown its dividend an average of 4.47%.  Recent years have been a little more generous with increases.  That growth rates has resulted in dividend income almost doubling during the 15 year time frame or an overall increase of 89%.

XEL vs S&P500

Being an energy company, you really aren’t expecting groundbreaking growth.  However, looing at the last decade, we see that XEL has still managed to slightly outperform the S&P500.  Add to that a better yield, and you have a nice boring holding that gives modest growth and decent growing income.

XEL Key Stats:

Market Cap: $22 Billion

Dividend Yield: 3.32%

Payout Ratio: 61.75%

PE ratio:19.61

Beta: 0.07

Profit Margin: 10.11%

Total Cash: $359 Million

Total Debt: $14.48 Billion

Beta is freakishly low.  Debt concerns me.  Profit Margin remains within managements goal of 60-70%, and at the current level allows room for future dividend increases.


XEL is a perfect retiree stock holding.  Decent stock appreciation and a decent yield that has room to grow.  I would however hold off on purchasing at the current price and look for an entry price at $41.

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