Rising Treasury yield could concern utilities
On October 3, the US ten-year Treasury constant maturity rate was 3.16%, its highest level since July 1, 2011. On August 23, the ten-year Treasury constant maturity rate was 2.8%, its lowest level since May 29.
Between August 23 and October 3, the yield rose ~36 basis points. In the period, Dominion Energy (D) fell 1.1%. Rising Treasury yields could be a concern for rate-sensitive stocks such as utilities.
Dominion’s dividend yield
As of October 3, Dominion Energy is trading at a dividend yield of ~4.8%. At that level, it’s 1.3% higher than the Utilities Select Sector SPDR ETF’s (XLU) yield. Until 2020, Dominion Energy’s earnings could grow at a 6%–8% compound annual growth rate. Its dividend growth rate should track its earnings growth rate.