Dominion Energy Offers Asset Appreciation and Dividend Income for Double-Digit-Percentage Total Returns (NYSE:D)

Ned Piplovic

Dominion Energy

After a significant drop in early 2018, the Dominion Energy, Inc. (NYSE:D) share been rising steadily, and the company continued to provide consistent return on its shareholders’ investment.

During the first half of 2018, the company’s share price suffered its third-highest percentage decline in the past five decades. The 26% drop between December 2017 and June 2018 followed the share price drops of approximately 35% each in 2002 and after the 2008 financial crisis. While still below the levels prior to the 2018 decline, the current share price has recovered more than two-thirds of those losses and continues to gain.

The share price growth since the 2018 decline has pushed the 50-day moving average above its 200-day counter part in bullish manner nearly 12 months ago. Except for a brief dip caused by the overall market correction in late 2018, the 50-day moving average has continued to rise, and has steadily remained above the 200-day moving average. After dipping below the 200-day moving average three times in August 2019, the share price rebounded and has been trading above both moving averages since the last week of August 2019.

One of the reasons for a recent share price pullback were two periods of missed earnings expectations. However, Dominion Energy beat Wall Street analysts’ expectations in its most recent period and confirmed a steady outlook for the remainder of the year.

 

Financial Results

On July 31, 2019, Dominion Energy reported net income of $54 million for the second-quarter of 2019, or $0.05 per diluted share. That was lower than the $449 million net income for the same period last year, or $0.69 per share.

However, operating earnings for the three months ended June 30, 2019, of $619 million were or more than 10% above the $560 million operating earnings one year earlier. The variance between net income and operating earnings was primarily attributable to charges related to merger integration of the SCANA Corporation acquired in early 2019 and a voluntary retirement program. The current earnings per share (EPS) of $0.77 beat the analysts’ anticipated quarterly earnings of $0.76 by 1.3%.

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“Strong performance across our business units combined with favorable weather resulted in operating earnings per share above the midpoint of our quarterly guidance range. Adjusted for normal weather, quarterly results were at the midpoint of our guidance representing solid execution for the quarter,” stated Thomas F. Farrell, II, chairman, president and chief executive officer. Based on the results for the most recent quarter and the first half of the year, Dominion Energy affirmed its full-year outlook of $4.05 to $4.40 operating earnings per share.

 

Dividends

Dominion Energy has been distributing dividends for more than nine decades. The company also has a current streak of 15 consecutive annual dividend hikes. The current $0.9175 quarterly dividend payout is nearly 10% higher than the $0.835 payout from the same period last year. This new quarterly payout corresponds to a $3.67 annualized distribution and a 4.7% forward dividend yield, which is 18.5% higher than the company’s own 3.99% yield average over the last five years

Furthermore, the company’s current 4.7% yield is 137% higher than the 1.99% average yields of the overall Utilities sector. Additionally, the current Dominion Energy yield is also nearly 130% higher than the 2.08% simple average yield of the Electric Utilities industry segment.

In addition to outperforming the segment’s overall yield average, Dominion Energy’s current yield is also nearly 30% higher than the 3.68% average yield of the segment’s only dividend-paying companies.

Since the beginning of the current streak of annual dividend hikes, Dominion Energy nearly tripled its total annual payout. This level of advancement corresponds to an average growth rate of 6.8% per year since 2004.

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Dominion Energy

Share Price

The share price entered the trailing 12-month period on a rising uptrend and gained 8% before reversing direction. Under downward pressure from the overall market correction in late 2018, the share price lost all those gains and fell to is 52-week low of $67.97 on January 4, 2019. However, after reversing direction at the beginning of the year, the share price gained nearly 17% before reaching its 52-week high of $79.24 on June 25, 2019.

Since peaking in late June, the share price has pulled back 2% to close on August 30, 2019, at $77.63. This closing price was 9% higher than it was one year earlier and 14.2% higher than the 52-week low from January. Despite the large pullback in early 2018, the Aug. 30 closing price was still 13% higher than it was five years ago.

Assisted by a dividend income of nearly 5%, the share price delivered as 14.1% total return over the last year. The total returns over the last three and five years were 17% and 32%, respectively.

 

Dominion Energy, Inc. (NYSE:D)

Headquartered in Richmond, Virginia, and founded in 1909, Dominion Energy, Inc. operates as an energy producer and distributor in the United States. The company’s Power Generation segment generates electricity from conventional fuels and renewable resources. Additionally, the company’s Power Delivery segment provides regulated electric transmission and distribution operations to residential, commercial, industrial and government customers. Lastly, the company’s Gas Infrastructure segment offers gathering, processing, storage, pipeline transmission and regulated distribution of gas and liquefied natural gas (LNG). As of August 2019, the company served approximately 7.5 million customers in 18 states. Dominion Energy’s assets portfolio included more than 25,000 megawatts of generating capacity and nearly 70,000 miles of electric transmission and distribution lines. The company also owned and operated underground storage systems with approximately 1 trillion cubic feet of natural gas storage capacity and more than 65,000 miles of combined natural gas transmission and distribution pipelines. Formerly known as Dominion Resources, Inc., the company changed its name to Dominion Energy, Inc. in May 2017.

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Ned-Piplovic

Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.

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