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Analyzing Dominion Resources’ Dividend Payment Trends

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Steady rise

Utility stocks tend to offer better dividend yields than other sectors, since they generate stable and predictable cash flows. Companies that operate in a regulated utility business pay stable dividends to investors. These stocks are preferred by risk-averse investors due to their resemblance to fixed-income instruments.

Dominion Resources (D) has shown a steady rise in its capital distribution.

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Expansion in regulated operations may increase dividends

In 2015, Dominion paid $2.5 per share as dividends. This accounts to a dividend yield of 3.7% as of December 8, 2015. Dominion has shown a healthy and steady rise in its dividend payouts since 2008.

Compared to 2014, Dominion increased its dividend by 8% in 2015. Investors may see continued growth in dividends in the coming years, as Dominion is aggressively focusing on its regulated operations. Regulated operations contribute 85% to the company’s total earnings.

Comparing the yields of utility companies in Dominion Resources’ peer group, NextEra Energy’s (NEE) dividend yield as of December 8, 2015, stands at 3.1%, while Duke Energy’s (DUK) yield stands at 4.8%.

As utility companies with highly regulated operations continue to flourish and offer robust dividends, unregulated utility companies are facing difficult times to keep up their dividend growth. Exelon (EXC) is highly dependent upon its unregulated business and has cut its dividend payments severely in the last couple of years.

Investors can gain passive exposure to utility companies by investing in the Vanguard Utilities ETF (VPU). VPU invests 6.2% of its holdings in Dominion Resources.

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