Smart Dividend Portfolio Edition #46: Wired for Growth
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Dear Investor,
Welcome to the 46th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: February 3, 2025
Stocks ended the turbulent week mixed. The Dow Jones Industrial Average (DJIA) rose by 0.27%, while the S&P 500 (SPX) was down by 1%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) logged weekly losses of 1.64% and 1.36%, respectively. Despite the weekly slide, stocks are firmly in the green year-to-date, with the DJIA leading the gains.
On Monday, tech stocks pulled the broad market down following the news that Chinese start-up DeepSeek released a competitive AI model. U.S. technology stocks were rattled by DeepSeek’s claims that its AI chatbot performed just as well as the leading AI applications at a fraction of the cost, utilizing much less data and power. Investor anxiousness about tech leaders’ elevated valuations resurfaced again, heated up by questions regarding the necessity of the enormous capex surge into AI chips, data centers, and electricity. However, after Monday’s freefall, dip-buyers rushed in to pick AI leaders at a discount as strategists questioned DeepSeek’s threat to U.S. AI leadership.
As stocks rebounded from Monday’s sell-off, reassured investors shrugged off December Core PCE, reading that inflation rose above November’s annualized pace, which was in line with expectations. The preliminary estimate of the Q4 GDP growth revealed that the economy remained firmly in growth mode. Although growth came in weaker than economists expected last quarter, the weakness was caused by the many disruptions, such as a strike at Boeing, two hurricanes, and LA wildfires. Besides, it capped a year in which the economy expanded by 2.8%, slightly below 2023’s pace.
The underlying economic strength—measured by consumer spending and private investment—remained healthy throughout the year. Analysts positively opined on the data, returning to the “Goldilocks” narrative. Given this background, the Federal Reserve’s decision to hold rates unchanged was largely a non-event for the stock markets, as it was a widely expected outcome.
Fed Chair Jerome Powell said that policymakers didn’t need “to be in a hurry” to cut rates. They believe a cautious approach is necessary in view of the stalled progress on the inflation front and uncertainty posed by economic policy. President Trump’s promise to cut corporate taxes and ease regulations could reduce inflation and speed up the economy, while the effects of high tariffs could have the opposite effect.
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This Week’s Quality Dividend Stock Idea
Evergy (EVRG) is a U.S.-based electric utility company providing electricity generation, transmission, and distribution services across Kansas and Missouri. The company was formed in 2018 through the merger of Westar Energy and Great Plains Energy. The company is actively investing in renewable energy and grid modernization to enhance reliability and sustainability.
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Powering Growth Through Strategic Expansion and Sustainability
Evergy is the largest electric utility in Kansas and serves parts of Missouri. The merger between Westar Energy and Great Plains Energy aimed to enhance operational efficiency, strengthen financial performance, and accelerate investments in renewable energy and grid modernization.
Westar Energy, originally founded in 1909 as Kansas Gas and Electric, grew through acquisitions and infrastructure investments to become the largest electric provider in Kansas. Meanwhile, Great Plains Energy, the parent company of Kansas City Power & Light, had a history dating back to 1882 and played a key role in regional electrification. Their combination positioned Evergy as a stronger, more competitive utility with improved cost structures and capital efficiencies.
Since its formation, Evergy has emphasized diversification to clean energy sources along with the traditional ones by expanding its wind and solar capacity. Financially, Evergy has delivered stable earnings growth, supported by cost synergies from the merger and the expansion of its base rate. The company has consistently returned capital to shareholders through dividends and share buybacks while maintaining a strong balance sheet.
Today, with a market capitalization of nearly $15 billion with annual revenues of ~$5.5 billion, Evergy serves around 1.6 million customers.
A Stable and Regulated Growth Model Powering Long-Term Profitability
Evergy operates as a regulated electric utility, generating revenue through the production, transmission, and distribution of electricity across Kansas and Missouri. Its primary subsidiaries—Kansas Central, Metro, Missouri West, and Transmission Company—enable efficient service delivery. As a state-regulated utility, Evergy benefits from predictable revenue streams and stable cash flows, with electricity rates set by regulatory authorities. The company’s customer base consists primarily of residential and commercial users, comprising 37% and 33%, respectively.
Evergy owns a diversified energy generation portfolio, including coal, natural gas, nuclear, wind, and solar assets. Its ongoing investments in renewable energy and grid modernization enhance operational efficiency while aligning with regulatory incentives. Cost recovery mechanisms allow the company to pass infrastructure investment costs onto customers through approved rate adjustments, ensuring financial stability.
A key driver of Evergy’s earnings growth is its expanding rate base. As the company upgrades transmission and distribution networks, invests in renewable capacity, and enhances grid reliability, it secures regulatory approval for higher rates, directly fueling revenue growth.
In Q3 2024, Evergy reported adjusted earnings of $2.02 per share on operating revenues of $1.8 billion, significantly exceeding analyst expectations of $0.37 per share on $1 billion in revenue. The company is set to announce Q4 results on March 6th.
For FY24, Evergy reiterated its adjusted earnings guidance of $3.83 per share at the midpoint, an increase of 8.2% year-over-year. Additionally, the company has established FY25 guidance at $4.02 per share. From 2025 through 2029, the company expects EPS growth to be in the upper half of its 4%–6% compound annual growth rate (CAGR) range. Analysts project Evergy’s annual revenue and earnings growth at 3.9% and 5.7%, respectively.
Infrastructure Investments and Load Growth
Evergy plans to invest $16.2 billion in infrastructure between 2025 and 2029, an increase of $3.7 billion from its prior five-year forecast. This aggressive investment strategy reflects the company’s expectations for load growth in the range of 2% to 3% through 2029.
The company’s economic development pipeline remains strong, supported by major corporate expansions. Google, Meta, and Panasonic are building data centers and an EV battery manufacturing plant in Kansas and Missouri, adding approximately 750 megawatts of demand. Each of these projects will become the largest customer in its respective jurisdiction. Beyond these developments, companies with projects that will demand power of more than six gigawatts are actively considering Evergy’s service territory.
Additionally, Evergy is in advanced negotiations with two new data centers, which could add between 500 and 1,000 megawatts of incremental load, further reinforcing its long-term growth outlook. An electrical load refers to the amount of power consumed by a circuit, and these data centers will significantly increase electricity consumption.
Evergy maintains a strong focus on cost control and operational efficiencies, leveraging automation, digital technologies, and process optimization to enhance margins and cash flow generation. A disciplined capital allocation strategy supports financial strength, as the company prioritizes regulated investments with high returns and capitalizes on favorable regulatory frameworks. Evergy’s return on equity (ROE) currently stands at 8.7%, ranking it among the top 50% of utility companies. Analysts project its ROE to rise to 9.2% over the next three years, further solidifying its competitive position in the industry.
Major credit rating agencies, including S&P Global and Moody’s, have affirmed Evergy’s long-term credit ratings at “BBB+” and “Baa1,” respectively, reflecting a stable outlook. The company’s interest coverage ratio of 2.6x indicates that its earnings comfortably cover interest obligations, underscoring its solid financial position.
Consistent Dividend Growth and Financial Stability
Evergy has been a reliable dividend payer for over two decades, consistently increasing its dividend for the past 21 years. Most recently, the company announced a 4% increase in its quarterly dividend, bringing its annualized dividend to $2.67 per share.
Historically, Evergy has maintained a strong track record of dividend growth, averaging annual increases of 6.2% over the past five years. The company currently has a dividend payout ratio of 69.5%, a level generally considered sustainable for utility companies. Analysts expect Evergy’s dividend to rise by 4.23% in the current fiscal year, reflecting confidence in its financial stability and long-term earnings potential.
Over the past year, EVRG shares have climbed more than 20%, yet the stock continues to trade at a discount relative to industry averages and peers. Wall Street analysts remain bullish, with an average price target implying an upside of over 7.7% in the next 12 months. Notably, the highest price target suggests a potential gain of 17.1% from current levels.
Investing Takeaway
Evergy presents a compelling investment opportunity for long-term investors seeking stability, consistent dividends, and growth potential. The company benefits from a regulated business model, ensuring predictable cash flow and earnings. Additionally, its strong commitment to infrastructure investments, renewable energy expansion, and operational efficiencies positions it well for future growth.
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Dividend Investor Portfolio
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Portfolio News
▣ ADP (ADP) announced better-than-expected fiscal second-quarter results with adjusted diluted EPS of $2.35 on revenues of $5 billion. This was above consensus estimates of earnings of $2.29 per share on revenues of $4.97 billion. Looking ahead, ADP expects its revenues to grow from 6% to 7% year-over-year to $20.5 billion with adjusted diluted earnings likely to increase between 7% and 9% to $9.91 at midpoint.
▣ Amgen (AMGN) is expected to announce its fiscal Q4 results on February 4th. Analysts expect the company to report earnings of $5.07 per share on revenues of $8.88 billion. Meanwhile, Wells Fargo sees a downside to Amgen’s 2025 consensus estimates, warning that sales guidance may fall short. Wells Fargo has projected $34.1 billion in revenue, below the consensus estimate of $34.5 billion, and expects higher R&D spending to weigh on earnings. Furthermore, Wells Fargo has forecasted EPS of $20.10 per share versus Street estimates of $20.84. According to Wells Fargo, while Amgen’s 2025 outlook may disappoint, Q4 results appear “in line.” The firm has a Hold rating on AMGN with a price target of $280.
▣ BlackRock (BLK) has raised its quarterly cash dividend by 2% to $5.21 per share payable on March 24 to shareholders of record on March 7, 2025.
▣ IBM (IBM) announced better-than-expected Q4 results with adjusted EPS of $3.92 on revenues of $17.6 billion. For reference, analysts were expecting the company to report earnings of $3.78 per share on revenues of $17.54 billion. Looking ahead, in FY25, IBM has forecasted revenues of $65.9 billion, a growth of “at least” 5% year-over-year.
▣ Edison International (EIX) Southern California Edison (SCE), a subsidiary of Edison International, faces accusations of sparking the deadly Eaton Fire after its equipment allegedly produced a powerful electric arc near Altadena, California. A lawsuit cites security footage showing an arc moments before the fire ignited. In response, SCE informed regulators that its preliminary data showed no faults in its transmission lines until over an hour after the reported start of the fire. While the Los Angeles County Fire Department leads the investigation, SCE is cooperating by preserving its facilities and providing the requested data. The fire, which began on January 7, 2025, is now 98% contained.
▣ LyondellBasell (LYB) announced Q4 results with adjusted EPS of $0.75 on revenues of $9.5 billion. Analysts were expecting the company to report Q4 earnings of $0.72 per share on revenues of $9.2 billion. Looking ahead, LYB remains “watchful,” and anticipates macroeconomic shifts that will drive restocking of supply chains, boost the demand for durable goods, and support a broader recovery. The company expects seasonal demand to strengthen in Q1, with lower interest rates, easing inflation, and pent-up demand fueling durable goods consumption—benefiting its polypropylene and Intermediates and Derivatives businesses.
▣ PepsiCo (PEP) is expected to announce its Q4 results on February 4th. Analysts expect the beverage giant to report Q4 earnings of $1.94 per share on revenues of $27.9 billion. In FY24, PEP has projected its organic revenue to rise by 4% year-over-year to $95.1 billion while core EPS is projected to increase by 8% year-over-year to $8.15 per share.
▣ Philip Morris (PM) is expected to announce its Q4 results on February 6th. Analysts expect the tobacco giant to report earnings of $1.50 per share on revenues of $9.44 billion. In FY24, Philip Morris forecasted FY24 adjusted diluted EPS of $6.48 at midpoint, an increase of 7.8% year-over-year.
▣ Qualcomm (QCOM) is expected to announce its fiscal Q1 results on February 5th. Analysts expect the chip giant to report earnings of $2.97 per share on revenues of $10.9 billion. The chip giant has projected Q1 revenue of $10.9 billion and adjusted EPS of $2.95 at midpoints, reflecting sequential increases of 6.8% and 13.9%, respectively.
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Recent Trades
None at the moment, although we are constantly evaluating stocks for a possible addition to the portfolio. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.77% | +9.66% | $5,393.89 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Mar 14, 2025 | Apr 01, 2025 | 2.46% | $6.16 |
| Allianz SE ADR (ALIZY) | May 09, 2025 | May 28, 2025 | 5.79% | $1.52 |
| Amgen (AMGN) | Feb 14, 2025 | Mar 07, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Mar 07, 2025 | Mar 24, 2025 | 2.56% | $20.84 |
| Edison International (EIX) | Mar 28, 2025 | Apr 30, 2025 | 5.12% | $3.31 |
| EOG Resources (EOG) | Apr 17, 2025 | Apr 30, 2025 | 3.06% | $3.92 |
| IBM (IBM) | Feb 10, 2025 | Mar 10, 2025 | 3.13% | $6.68 |
| JPMorgan Chase (JPM) | Apr 04, 2025 | Apr 30, 2025 | 2.86% | $5.00 |
| Kroger (KR) | Feb 15, 2025 | Mar 01, 2025 | 2.82% | $1.28 |
| LyondellBasell (LYB) | Mar 10, 2025 | Mar 17, 2025 | 5.62% | $5.36 |
| PepsiCo (PEP) | Mar 07, 2025 | Apr 07, 2025 | 3.64% | $5.44 |
| Philip Morris (PM) | Mar 21, 2025 | Apr 09, 2025 | 6.06% | $5.40 |
| Qualcomm (QCOM) | Mar 03, 2025 | Mar 24, 2025 | 2.25% | $3.40 |
| VICI Properties (VICI) | Mar 21, 2025 | Apr 04, 2025 | 5.19% | $1.72 |
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
