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Analyzing Duke Energy from a Dividend Investor’s Perspective

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Duke Energy’s dividend profile

Duke Energy (DUK) is currently trading at a dividend yield of 4.1%, much higher than the industry average of 3.5%. In comparison, peer Southern Company (SO) yields 4.4%, and NextEra Energy (NEE) yields 3%.

Duke’s dividends have grown fairly well over the past five years at a rate of 2.5% compounded annually. On the other hand, utilities at large (XLU) increased their dividends by a bit more than 4%.

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Duke’s earnings are stable

Duke Energy’s relatively weaker dividend growth in the past few years has been due in part to slower earnings driven by poor electricity consumption, which has been a common trend in the utility industry as a whole.

Duke seems comfortable achieving its targeted 4%–6% earnings growth over the next several years. Its healthy product portfolio of electric, gas, renewables, and midstream puts it in what appears to be a strong position for balanced growth going forward. The recent sale of Duke’s volatile merchant power business in Latin America also bodes well for stable long-term earnings growth.

For a comparison of the top two utilities’ dividend profiles, read Southern Company and Duke Energy: A Dividend Face-Off.

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