Sturdy dividend growth
Dominion Energy (D), the third-largest utility by market cap, established a dividend of $0.9175 per share for Q1 2019, which implies annualized dividends of $3.67 per share in 2019, which would be an increase of 10% compared to dividends in 2018. These dividends are subject to the board’s approval next month and mark the 16th annual consecutive dividend increase. The dividends will likely be paid in March next year.
Dominion Energy’s long dividend payment history is indeed attractive compared to other top utilites. It has paid a cash dividend for the last 363 consecutive quarters.
Dominion Energy is currently trading at a dividend yield of 4.4%, notably higher than the industry average of 3.4%. Peer Duke Energy (DUK) is trading at a yield of 4.1%, while Georgia-based regulated utility Southern Company (SO) currently offers a yield of 5.1%.
In the last five years, Dominion Energy’s dividends increased by 8.2% compounded annually. At the same time, utilities (XLU) at large managed to increase their per share dividends by an average ~4% compounded annually.
Dominion Energy’s above-average dividend growth is fueled by its above-average earnings growth. Dominion obtains a large portion of its total earnings from regulated operations. Thus, the company has relative earnings stability, which ultimately bodes well for stable dividends.
By comparison, Southern Company increased its per share dividends by 3.4%, while Duke Energy’s dividend growth rate came in at 3.3% compounded annually in the last five years.