NWE - NorthWestern Energy Group: Attractive Yield But Limited Growth
2024-02-24 00:57:27 ET
Summary
- NorthWestern Energy has received regulatory approvals to increase rates in Montana and South Dakota.
- It is currently unable to generate all the energy necessary to serve its customers, leading to significant capex investments and higher debt expected in the future.
- Shares are in a fair value range, but the dividend offers a strong yield, and shares can be considered in a defensive or income-oriented portfolio.
It has been about ten months since I last updated my views on the utility company NorthWestern Energy (NWE), a relatively small gas and electric utility that primarily serves Montana and South Dakota, although with a presence in Nebraska as well. My view back in May 2023 was that investors should be wary of the company's capex spending needs (which are significant), as it was clear that the company would need to both take on additional debt with interest rates elevated, and raise additional equity. While it has been a reliable dividend payer, yielding around 4.35% at the time, I did not see any special basis to recommend it. That particular analysis was written very near the 52-week-high point for the shares, which are now down around 12% on a total return basis....
NorthWestern Energy Group: Attractive Yield But Limited Growth