Dominion Energy Stock Compared to Its Peers



Why Dominion Energy?

US utilities have outperformed the broader markets so far this year. There are many investment options among S&P 500 utilities that could continue to perform well in the long term. But Dominion Energy (D) stands tall among its peers in many aspects. Its above-average earnings growth is expected to lead to double the utilities’ expected average dividend growth for the next few years. Its business mix also notably improved in the last few years. Contributions from midstream, gas, and renewables are likely to bode well for its earnings growth in the next few quarters.

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Dominion Energy is the third-largest utility by market capitalization and operates mainly in Virginia. It has a capacity of nearly 26 GW (gigawatts) and serves more than 6 million customers.

Dominion stock so far this year

Dominion Energy stock has underperformed the broader utilities since the beginning of 2017. It has managed to gain a little more than 9% year-to-date, while the Utilities Select Sector SPDR ETF (XLU), which tracks the S&P 500 Utilities Index, rose 16% in the same period. Flat growth in 2017 and issues related to the Millstone nuclear power plant might be behind Dominion’s underperformance.

Dominion’s peer NextEra Energy (NEE) rose 32%, and Duke Energy (DUK) rose 14% in the same period.

Utility stocks are generally perceived as safe compared to the broader markets. A stable dividend is another important feature of utilities. Dominion Energy fits in well due to its stable dividend profile and strong dividend growth.

In this series, we’ll see how Dominion Energy is placed in terms of earnings compared to its peers. We’ll also see how its stock is valued and how it could look going forward. We’ll also look at its dividend profile and how it’s positioned for the future.

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