IDA - Idacorp: This Underappreciated Dividend Growth Stock Remains A Buy

2024-05-22 07:00:00 ET

Summary

• IDACORP's total returns have more than doubled the S&P 500 in the last three months.
• Lower usage per customer due to weather and higher interest expense caused the electric utility to miss analysts' expectations for diluted EPS for the first quarter.
• Given the circumstances, IDA's interest coverage ratio was fine for Q1.
• Shares of the electric utility could be trading 8% below fair value.
• IDA could realistically generate double-digit annual total returns in the years ahead.

It's not a secret that utilities have been off to the races lately. The Utilities Select Sector SPDR Fund ETF ( XLU ) has gained 14% year to date. This is ahead of the 12% gains of the S&P 500 index ( SP500 ).

That outperformance makes sense, too. U.S. Q1 GDP growth came in at an annual rate of 1.6%, with the first estimate. That was well below the 2.3% consensus and even more of a slowdown from Q4 2023's 3.4% rate....

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