Regulated electricity and gas utility Xcel Energy (XEL - Get Report) powers on 3.4 million electric and 1.9 million natural gas customers spread across eight Midwestern states. While that's far from the most exciting business out there, it has been very lucrative for Xcel. Over the last five years, the firm has averaged annualized gains of nearly 10% on top of what's now a 3.7% dividend payout.
Xcel spent the last decade adjusting to life as a regulated utility after unloading its generation assets and focusing on stable, predictable investment income. Investors should expect considerable investment from Xcel over the next few years, as the firm invests in infrastructure to justify the higher rates that regulators have approved. While those improvements with be costly, Xcel's history of generating attractive returns on investment should be a good guideline to how those future investments perform.The energy business is capital intense, and that shows through in Xcel's balance sheet. The firm currently carries $11 billion in debt that's offset by a relatively small $1.7 billion cash and investment balance. Even so, XEL's cash flows are more than sufficient to cover both CapEx and dividend payouts in 2013. With rising analyst sentiment in this stock, we're betting on shares this week.