#3 - Dominion Energy Inc. (NYSE:D)
Dominion Energy Inc. (NYSE: D) - Unlike our first two companies, Dominion faces a couple of challenges, but when you’re looking for a company that generates a high dividend yield, few utilities can match what Dominion Energy brings to the table. Dominion has a large service area in the eastern United States and is one of the most diversified utilities with separate operations for electric transmission, regulated and non-regulated power generation and natural gas delivery and transmission through its controlled limited partnership, Dominion Energy Midstream Partners LP.
Similar to other utility companies, Dominion is planning robust capital expenditures to the tune of $4.2 billion per year across all its business categories. By creating more generating capacity, the part of their power generation that is regulated should increase helping to fuel the company’s projections of 6-8% annualized earnings growth through 2020.
While investors may love the current 4.63% dividend yield, it comes at a price. The company was expecting to sell off the assets of their controlled partnership but has had to step back from this plan. This is making some analysts concerned about their growth which will have to come from increased debt or from the sale of equity. Another concern is their potential acquisition of SCANA Corporation. While growth through acquisition is not uncommon in this sector, it would leave Dominion with the responsibility for cleaning up SCANA's failed nuclear power plant construction projects.
Dominion is still calling for dividend growth of up to 10% per year through 2020. That may ease concerns about short-term earnings pressure.
About Dominion Energy
Dominion Energy, Inc produces and distributes energy in the United States. It operates through three operating segments: Dominion Energy Virginia, Dominion Energy South Carolina, and Contracted Energy. The Dominion Energy Virginia segment generates, transmits, and distributes regulated electricity to approximately 2.8 million residential, commercial, industrial, and governmental customers in Virginia and North Carolina.
Read More - Current Price
- $51.40
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $50.45 (1.8% Downside)
