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With an annual dividend yield of 2.90%, Xcel Energy Inc. (NASDAQ:XEL) is included among the 12 Best NASDAQ Stocks to Buy for Dividends.

Xcel Energy Inc. (NASDAQ:XEL) is a major US electricity and natural gas company with operations in 8 Western and Midwestern states.

On June 24, Morgan Stanley upped its price target on Xcel Energy Inc. (NASDAQ:XEL) from $87 to $89, while reaffirming an 'Equal Weight' rating on the shares. The target boost indicates an upside potential of almost 9% from the current share price.

The move comes after Morgan Stanley revised its price objectives for Regulated & Diversified Utilities / IPPs in North America for the month of May. The analyst firm noted that the utilities sector fell by 5.5% last month, significantly underperforming the gains of around 5.1% posted by the overall S&P during the period.

Xcel Energy Inc. (NASDAQ:XEL) has grown its dividends for 23 consecutive years, and intends to carry on this momentum by targeting annual dividend increases of 4-6% and a payout ratio of 45-55%. The stock currently boasts a robust annual dividend yield of 2.90%.

The Mairs & Power, an investment firm, stated the following regarding Xcel Energy Inc. (NASDAQ:XEL) in its Q1 2026 investor letter:

"Our build-up in exposure to Utilities in the last year aided relative performance in the quarter as the generally defensive sector overweight helped in a market that proved relatively choppy. The Fund owns Xcel Energy (NASDAQ:XEL) which we believe should benefit from stable and visible earnings growth from attractive service areas with favorable regulatory oversight."

While we acknowledge the potential of XEL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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