Sempra: This Dividend Growth Stock Is Worth Buying Now

Core Insights - Sempra Energy (SRE) is a major regulated electric and gas utility serving nearly 40 million consumers across North America, with operations segmented into Sempra California, Sempra Texas Utilities, and Sempra Infrastructure [1][7] Financial Performance - SRE's adjusted diluted EPS for Q1 2024 was $1.34, down 8.2% year-over-year, but exceeded analyst expectations by $0.05 [4][11] - Total revenue for Q1 2024 fell by 44.5% year-over-year to $3.6 billion, significantly below analyst consensus by $1.9 billion [11] - Natural gas revenue dropped by 57.6% year-over-year to $2.1 billion, primarily due to lower natural gas costs [12][11] - Electric revenue increased by 2.8% year-over-year to nearly $1.1 billion, attributed to income tax credits and higher transmission revenue [23] Growth Outlook - The company affirmed its FY 2024 adjusted EPS guidance range of $4.60 to $4.90, indicating a 3% growth rate over 2023 [13][14] - SRE's long-term adjusted diluted EPS growth rate is projected at 6% to 8% [19][25] - The company plans to invest $48 billion in capital over the next five years to support its growth targets [25] Valuation - SRE's current P/E ratio is 15.9, below its 10-year average of 18.7, suggesting the stock may be undervalued [6] - A fair value estimate for SRE is approximately $84 per share, indicating a 9% discount from the current share price of $76 [6][19] Dividend Information - SRE has a forward dividend yield of 3.2%, below the sector median of 4%, but maintains a secure payout ratio of 51.1% for 2024 [17] - The company has a 10-year compound annual dividend growth rate of 6.6%, which is above the sector median [17] Strategic Developments - Sempra California is expecting a proposed decision for General Rate Case (GRC) in Q2, with a final decision anticipated by year-end [13] - Sempra Texas has filed a $3 billion System Resiliency Plan, with a decision expected from the Public Utilities Commission of Texas (PUCT) by year-end [25]