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CenterPoint Energy: Incrementalist Strategy Yields Security And Growth Amid Macro Volatility

May 02, 2023 7:08 AM ETCenterPoint Energy, Inc. (CNP)6 Comments
Jishan Sidhu profile picture
Jishan Sidhu


  • CenterPoint Energy has experienced superior 1Y performance (+1.52%) to both the market (SPY: +0.25%) as well as the general utilities index (-2.03%).
  • This comes alongside a 2.49% dividend yield, complete with safety, consistency, and dividend growth built-in.
  • As a utilities company, CenterPoint experiences lower implied volatility than the rest of the market.
  • The company's growth comes from annual price hikes in addition to incremental improvements to both the company infrastructure and its offerings.
  • Due to a relative undervaluation, the company's ability to return capital to shareholders in a stable fashion, and prospective long-term growth, I rate the company a 'buy'.

Electric Reliability Council Of Texas Warns Of Ultra High Demand On State"s Power Grid

Brandon Bell

CenterPoint Energy (NYSE:CNP) is an American Fortune 500 electric and natural gas utility serving the states of Indiana, Ohio, Louisiana, Minnesota, Mississippi, and Texas.

In the TTM period, the company has recorded $9.34bn in sales, up 11.60% from 2021, alongside a TTM EBITDA

This article was written by

Jishan Sidhu profile picture
I am a Canadian business student focused on quality long-only articles and searching for high-value companies. I have an event-driven focus, evaluating how equities perform under macro events, considering their financials and corporate strategy above all else.Through university clubs, I would also like to disclose my association with Francesco Infusino.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

OldConservationist profile picture
I am up nicely I remember when it was a whole shit show and they cut the dividend that is the time I got in. $16, $17 range. Now I would sell before another shit show happens LOL
This company is under valued due to poor management. Cnp cut dividend in half crushing share price. They let CEO go. Shareholders voted down management compensation but CNP ignored shareholders vote giving the their undeserved bonuses. Restore dividend and share price will go up.
Abullman profile picture
@michaelrohricht Please correct me if I’m wrong but I thought that CNP slashed their dividend back in April ‘20 when Enable Midstream Partners (which CNP owned 54% of at the time) severely cut it’s dividend to CNP. If I’m not mistaken, they no longer have a stake in Enable Midstream Partners because it was bought by ETP. I agree with you about poor management and if they would restore the dividend to it’s previous level that the stock would appreciate considerably. However, I don’t believe that they have sufficient FCF to responsibly accomplish that.
ISTJ Investor profile picture
@Abullman I haven’t looked in detail in a while, but the div was cut to reflect upcoming loss of cash flow from Enable, which was indeed sold. They are, thus far successfully, growing from that reduced base. New management seems sound to my eye - conservative and focused on being the best utility they can be.

I would have preferred to see them divest the Indiana electric asset (a legacy of previous mgmt), and focus on the Houston metro distribution business; I.e. wires only, no generation. Houston metro is a big market.
@Abullman management sold Enable to Energy Transfer at the worst possible time. Oil and NG were recovering from covid hoax. CNP moto sell low. They held Enable shareholders hostage for years because they could not make a decision.
ISTJ Investor profile picture
CNP does not generate power in Texas, only in Indiana. Texas is about 95% of the electric business.
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