CenterPoint Energy, Inc.

CenterPoint Energy updated its long-term financial and capital plans, raising its 2025 non-GAAP EPS guidance to $1.75-$1.77 and initiating 2026 guidance at $1.89-$1.91, while targeting 7-9% annual EPS growth through 2035. The company increased its customer-driven capital investment plan by $2 billion through 2030, now totaling at least $65 billion through 2035, driven by an anticipated 50% increase in Houston's peak electric load by 2031. To fund these investments, CenterPoint plans to self-fund approximately 65% from improved operating cash flows, recycle capital through asset sales (e.g., Ohio Gas LDC by year-end), moderate dividend growth to 6% annually, and undertake modest equity issuances of approximately $3 billion from 2028-2035, leveraging a supportive regulatory environment and projecting an 11%+ rate base CAGR through the decade.

Analysis

CenterPoint Energy (CNP) has presented a comprehensive 10-year strategic update, signaling a significant acceleration in growth underpinned by surging energy demand in its key service territories. The company raised its 2025 non-GAAP EPS guidance to a range of $1.75-$1.77, representing 9% year-over-year growth at the midpoint, and initiated 2026 guidance of $1.89-$1.91. More significantly, management extended its long-term guidance to a 7-9% annual non-GAAP EPS growth target through 2035, targeting the mid-to-high end of that range from 2026-2028. This growth is fueled by a newly expanded capital investment plan of at least $65 billion through 2035, including a $2 billion increase through 2030, driven by an anticipated near-50% increase in Houston's peak electric load by 2031. The financing plan appears well-defined and de-risked, relying on self-funding approximately 65% of capex from improved operating cash flows, recycling capital from the planned sale of its Ohio Gas LDC by year-end, and moderating annual dividend growth to approximately 6%. Notably, common equity needs are pre-funded through 2027 via a $1.1 billion forward sale, with only a modest $3 billion in issuances projected from 2028-2035. The plan's credibility is reinforced by a supportive regulatory environment, with over 85% of capex recoverable via interim trackers, and a continued focus on O&M reductions of 1-2% annually to manage customer affordability.

Key Decisions for Investors

• Investors should re-evaluate their models based on the upgraded 7-9% annual EPS growth target through 2035 and an 11%+ rate base CAGR through 2030, which positions CNP as a premium-growth utility driven by tangible demand in Texas.
• The moderation of dividend growth to 6% annually should be viewed as a prudent capital allocation decision that strengthens the balance sheet, reduces future equity needs, and funds a higher-return capital investment program.
• Monitor the execution of the Ohio Gas LDC asset sale by year-end, as this is a critical catalyst for capital recycling and validating management's financing strategy.
• Track the potential pull-forward of the $10 billion+ in incremental capital opportunities, particularly data center-related investments in Indiana and smart meter deployments, which could provide further upside to the current growth outlook.