Dominion: 8% Dividend Increase For This High Yield Utility Dividend Achiever

Utility stocks are popular among income investors because of their high dividend yields. What they are less known for is high dividend growth.

Dominion Resources (D) is a rare mix of both. Not only does it have a 4% dividend yield, which is double the average dividend yield in the S&P 500 Index, but it recently raised its dividend by 8%.

This is unusual, because typically utilities raise their dividends only at a low-single digit rate each year.

The reason why Dominion can grow its dividend at a high-single digit rate is because it is experiencing above-average growth for a utility. The company has modernized its assets and is reaping growth from investments in new energy sources.

Dominion is a Dividend Achiever. It has raised its shareholder payout for the past 14 consecutive years.

You can see the entire list of all 273 Dividend Achievers here.

This article will explain why Dominion could be a truly rare find—a high dividend growth utility stock.

Business Overview

Dominion is not a run-of-the-mill utility. It has a large electric utility business, but it also has a midstream energy transportation business.

Dominion Midstream (DM) had its IPO in 2014. Dominion owns the general partner and 64% of the limited partner interests in Dominion Midstream.

Its operations are split up into three reporting segments:

  • Dominion Virginia Power (19% of operating earnings)
  • Dominion Energy (25% of operating earnings)
  • Dominion Generation (56% of operating earnings)

The company possesses an extensive network across the U.S., which consists of 26,000 megawatts of generation, 14,400 miles of natural gas pipelines, and 6,500 miles of electric transmission lines.

It also has a huge natural gas storage system with capacity for 1 trillion cubic feet of natural gas.

In all, the company services more than 6 million utility and retail energy customers.

Business conditions remain sound. Operating earnings rose 6.5% over the first nine months of 2016. Last quarter was particularly strong for the company.

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