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Duke Energy’s Dividend Profile: Toe to Toe with Peers

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Duke Energy’s Dividend Profile: Toe to Toe with Peers PART 1 OF 4

Why Duke Energy’s Premium Yield Is Sagging

Duke Energy’s dividends

Duke Energy (DUK), the largest regulated utility in the US, has declared a quarterly dividend of $0.855 per share. It will go ex-date on May 17, and dividends will be paid on June 16, 2017. Duke Energy has been paying dividends for the past 91 consecutive years.

Duke Energy has one of the highest dividend yields among US utilities and is trading at a dividend yield of 4.2%. By comparison, the dividend yield of the Utilities Select Sector SPDR ETF (XLU) stands near 3.3%, while the SPDR S&P 500 ETF (SPY) (SPX-INDEX) yields around 2%.

Why Duke Energy’s Premium Yield Is Sagging

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Southern Company (SO) currently trades at a dividend yield of 4.6%. NextEra Energy’s (NEE) yield is near 3%.

Weak dividend growth

Although Duke has a premium yield, it’s dividend growth has not been the best in the US utility industry. Duke Energy’s dividends have grown below par over the past five years, at a rate of 2.5% (compounded annually). US utilities’ dividends on an average grew by more than 4% in this period.

Utilities generally pay higher dividends because they distribute a large chunk of their profits to their shareholders. Duke’s higher yield is indeed attractive, though the growth rate of these dividends over the longer time frame is much lower than the industry average.

You can read more about which utility has a better dividend profile in Market Realist’s series Southern Company and Duke Energy: A Dividend Yield Showdown?

Continue to the next part of this series for further comparisons of Duke with its peers.

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