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Dominion Energy’s Expected Earnings and Dividend Growth

Vineet Kulkarni - Author

Nov. 27 2017, Updated 7:32 a.m. ET

Dominion Energy’s dividend outlook

Dominion Energy (D) expects its earnings per share to grow at least 10% in 2018, 6%–8% annually from 2018 through 2020, and 5% thereafter. Dominion Energy’s fairly higher earnings growth compared to its peers seems achievable given its improved business mix in the last few years.

Dominion Energy’s gas distribution operations after the Questar acquisition lowered its dependence on the electric segment. Its Cove Point Liquefaction facility will be completed soon. It’s expected to improve its earnings growth in the next few years.

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At $52 billion of market capitalization, Dominion Energy is the third-largest utility holding company among the S&P 500 Utilities (XLU). Its large exposure to regulated operations bodes well for stable and predictable earnings. Its stable and above-average earnings growth could continue its above-average dividend growth going forward.

Total returns

Although Dominion Energy stock has underperformed broader utilities this year, it has largely tracked its peers in the last five years. Including its dividends, Dominion Energy returned 13% compounded annually in the last five years—close to the Utilities Select Sector SPDR ETF (XLU). In comparison, the SPDR S&P 500 (SPX-INDEX) (SPY) returned ~16% compounded annually during the same period.

Utilities (IDU) are a leading sector in terms of dividend yields among broader markets. To learn about top-yielding utilities and their dividend trends, read Sector Scan: The 10 Top-Yielding SPX Utility Stocks.


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