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DTE's Stargate Deal Turns Power Into Profits
Written by Jeffrey Neal Johnson. Originally Published: 2/20/2026.
Article Highlights
- The utility provider exceeded analyst expectations for quarterly earnings and raised its forward guidance, reflecting confidence in its long-term growth.
- A major partnership with leading technology firms to power a new hyperscale data center serves as a transformative catalyst for future capital expansion.
- Shareholders receive a consistent, growing dividend that provides defensive income stability during periods of broader stock market volatility.
The financial landscape of early 2026 has been defined by a single, sweeping theme: rotation. As investors flee the speculative froth of the technology sector, capital is moving into the tangible economy. While Silicon Valley debates how software efficiency will affect margins, the physical reality remains unchanged: artificial intelligence (AI) consumes massive amounts of electricity. In this environment, DTE Energy (NYSE: DTE) has emerged as a defensive shelter and a critical infrastructure partner for the digital age.
On Feb. 17, 2026, the Detroit-based utility delivered a beat-and-raise quarter that quieted some skeptics. DTE reported fourth-quarter operating earnings of $1.65 per share, topping the analyst consensus of $1.52. Revenue rose to $4.43 billion, ahead of expectations of $3.39 billion. The market reacted immediately, sending shares up roughly 2.8% on a day when the tech-heavy Nasdaq struggled. For investors tired of chip-stock volatility, DTE signals a different way to play AI: through the power grid.
Project Stargate: 1.4 Gigawatts of Guaranteed Growth
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The centerpiece of DTE's bullish case is a confirmed agreement to power 100% of the Stargate OpenAI data center campus in Saline Township, Michigan. This isn't a run-of-the-mill commercial contract; it's a partnership with industry titans Oracle (NYSE: ORCL) and OpenAI. The facility will require about 1.4 gigawatts (GW) of power — an immense load roughly equivalent to the output of a nuclear reactor or enough to power about one million homes — representing an approximate 25% increase in DTE's total electric load.
For investors, the economics matter more than the engineering. The agreement includes minimum monthly charges that cover 80% of the billing demand. This take-or-pay feature is critical: DTE is paid for the capacity whether AI servers are running at full tilt or sitting idle. In effect, it behaves like a royalty on the AI economy without the execution risk of picking the winning software model.
The physical build-out underscores the scale of the "physical AI" trade. Developed by Related Digital, the site will use advanced closed-loop cooling systems to reduce water usage and is expected to create more than 2,500 union construction jobs.
Management also said it's in advanced discussions for an additional 3 GW of load, suggesting Stargate could be just the opening act. Unlike peer CMS Energy (NYSE: CMS), which is focused on tariffs and smaller data centers, DTE is hunting whales — securing massive, single projects that move the needle immediately.
Dividends, Earnings, and $36 Billion in Spending
DTE's recent guidance gives investors visibility that uncertain markets crave. Management projected 2026 operating earnings per share (EPS) of $7.59 to $7.73, implying 6%–8% growth over the prior year — a pace near the top of the utility sector. Executives expressed confidence in reaching the high end of that range, supported in part by tax credits from their Renewable Natural Gas (RNG) business.
To finance the infrastructure needed for Stargate and the broader energy transition, DTE boosted its five-year capital plan by $6.5 billion to $36.5 billion through 2030. In the regulated utility model, capital spending drives future profits: regulators allow utilities to earn a defined return on equity on investments in the grid. So a $36.5 billion investment program effectively maps out future earnings growth as the rate base expands to handle AI loads.
Income-focused investors also have reasons to stay. The company declared a quarterly dividend of $1.165 per share, an annualized payout of $4.66. With a yield near 3.2% and 16 consecutive years of dividend increases, DTE offers a relatively inflation-resistant income stream that most speculative tech stocks don't provide.
The Wall of Worry: Risks and Reality
No investment is risk-free, and DTE faces several headwinds investors should consider. The most immediate is regulatory friction. Michigan Attorney General Dana Nessel filed a motion to reopen the approval of the Stargate contracts, arguing that DTE altered contract language — moving from a promise that payments would explicitly cover costs to language that aggregates revenues — which she says could let the utility run shortfalls in early years and shift costs to residential ratepayers with the promise of later repayment.
That dispute creates political noise and potential delays, though DTE contends the project will ultimately reduce customer costs by about $300 million.
Separately, a federal judge recently ordered DTE to pay a $100 million civil penalty related to environmental violations at its Zug Island facility. While a nine-figure fine attracts headlines, it's a one-time hit relative to roughly $1.5 billion in annual operating earnings and does not appear to threaten the company's long-term business model.
Timing is another challenge. The One Big Beautiful Bill Act (OBBBA), signed in 2025, requires wind and solar projects to start construction by July 4, 2026, to qualify for key tax credits. That hard deadline forces DTE to execute construction quickly but also accelerates asset growth for the company.
A Physical Toll Booth on the Digital Highway
DTE currently trades at a price-to-earnings ratio (P/E) of about 21x. While this is a premium versus slower-growing utilities (typically 16x–18x), it is a substantial discount relative to AI hardware and software stocks, which often trade at 30x or higher.
The stock offers a hybrid profile well suited to the present market: the downside protection of a regulated monopoly with a secure dividend, plus upside exposure to a major technological shift. As markets rotate from intangible software promises toward the hard assets that run them, DTE Energy looks like the pragmatic choice. For investors seeking AI exposure without the vertigo of lofty valuations, the power grid is a compelling physical hedge.
Is LyondellBasell's Nearly 10% Dividend Safe, or a Warning Sign for Investors?
Written by Leo Miller. Originally Published: 2/14/2026.
Article Highlights
- LyondellBasell’s nearly 10% dividend yield is attractive, but it’s elevated largely because the stock has fallen and the cycle is weak.
- Dividend coverage improved recently, yet full-year free cash flow lagged the dividend payout, keeping sustainability questions front and center.
- Leverage has risen versus historical norms, and management has signaled the dividend is under review—making policy decisions a near-term catalyst.
When a stock's dividend yield is approaching double digits, investors naturally take notice. With an indicated dividend yield of approximately 9.5%, chemical company LyondellBasell Industries (NYSE: LYB) is worth evaluating.
Very high yields can be enticing, but they often signal risk. Dividend yields can spike when a company's share price has fallen sharply, which may reflect underlying business weakness. That appears to be the case with LyondellBasell: the stock is down roughly 40% over the past three years, and a weak operating environment increases the risk that the dividend could be pressured.
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For example, basic materials and chemical company DOW (NYSE: DOW) had a dividend yield near 10% from April to mid-July 2025 before the firm cut its dividend in half. That episode underscores that investors in very high-yield stocks can't simply "set it and forget it."
So, is LyondellBasell's sky-high yield safe and sustainable? And what upside, if any, does the stock offer?
LYB: Chemical Giant Operating in a Historically Weak Environment
Lyondell's business converts hydrocarbon feedstocks such as ethane, propane and butane into plastic resins and other chemicals used in consumer products, packaging and auto parts. Because much of its output is commodity-grade, global supply and demand largely determine selling prices. Today, the market faces oversupply, which has pressured prices. In 2025, margins across Lyondell's relevant businesses were roughly 45% below historical averages.
That gap leaves room for recovery, but it also highlights the scale of the headwinds Lyondell faces. Management expects "modest improvements" next quarter, yet that primarily reflects seasonal dynamics rather than a sustained market rebound.
Questions Around Dividend Sustainability Persist
In 2025 Lyondell paid $1.76 billion in dividends—about 2.4 times its free cash flow for the year. The situation improved in the most recent quarter, when free cash flow was $557 million and fully covered the $443 million in dividends paid that period.
Still, weak cash generation over the full year relative to a high dividend payout is a concern. The company holds around $3.4 billion in cash and cash equivalents, which could be used to sustain the dividend if cash flow remains depressed.
However, Lyondell has emphasized its desire to maintain an investment-grade credit rating. Net debt to EBITDA now sits at 3.7x, well above its 10-year average of about 2x.
In other words, weak operating profits relative to debt make it difficult to justify drawing down cash to prop up a very high dividend, because that would further worsen leverage.
Asked about the possibility of a dividend cut, CEO Peter Vanacker called it a "very good question" and said the Board of Directors will discuss dividend policy at their next meeting in February. That could be when any change is decided.
LYB: Dividend at Risk as Recovery Timeline Remains Uncertain
Overall, Lyondell faces a real risk of a dividend reduction, though a cut is not certain. Analysts offer little optimism on the stock's near-term upside: the MarketBeat consensus price target of $51 implies roughly 12% downside, and the average of targets updated after the company's Jan. 30 earnings release is even lower at $47.80.
Keep in mind these are 12-month price targets; a meaningful recovery in margins and demand may take longer. If demand and profitability do rebound over the longer term, Lyondell could recover substantial ground—the stock traded above $85 in 2022 when demand was strong and EBITDA was near highs.
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